By Louis M. Solomon
One of the promises made
by international dispute resolution is that when the forum of the dispute
is an arbitration the proceedings are, and can remain, confidential
(see generally the discussion of the confidential nature of arbitrations in our e-book, International
Practice: Topics and Trends). What happens, however, if an
arbitral award needs to be enforced, or if a motion to vacate is made?
Are there ways to protect the confidentiality of the arbitration proceeding?
In the Federal Rules of Civil
Procedure, we are not aware of specific confidentiality rules governing
arbitral awards. Nor are we aware of such special rules among the local
rules of the federal courts. Nor are we aware of any special rules in the
New York state court system. Filing arbitral decisions under seal is a
cumbersome process, especially since an order of confidentiality needs to be in
place at the commencement of the judicial proceeding - that is, prior to the
time of the filing of the arbitral decision itself. The best bet in this
regard, in our experience, is to have proper corporate-lawyer drafting of the
arbitration clause reviewed by a litigator to make sure that dispute resolution
provision of the writing typically exchanged between parties includes a
specific agreement either that the arbitral award need not be filed in order to
move to enforce or vacate it. Alternatively, consider providing
that, if either party wishes to file the award in court, the parties - at
the time contracting - irrevocably stipulate to the confidential nature of the
arbitral award and proceedings and further stipulate that the award and any papers
of the proceedings can be filed under seal. The only other possibility is
for the party wanting to keep an arbitral award under seal to make a prompt
motion to seal. These motions have not fared particularly well.
recent case in which the author is lead counsel, at the time of the filing in
court of a prior arbitral award, the insurance carrier, who wanted the earlier
award to remain under seal, made a motion to seal. Even then the Court
rejected the argument that the entireties of the arbitral proceedings were
Johnson & Co. v. Lexington Ins. Co., Dkt. No. 3:11-cv-43-RLY-WGH
(S.D. Indiana Sept. 2011) In fact, the Court stated:
once a confidential settlement
agreement or arbitration decision becomes the subject of litigation, it must be
opened to the public just like any other information.
Herrnreiter v. Chicago Housing Authority, 281 F.3d 634, 637 (7th Cir. 2002) [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law]. At the same time, the amount
of a prior award was maintained under seal, the Court finding that
Not so in connection with the
recent arbitral decision in claims and counterclaims that Getty
Petroleum Marketing Inc. and Bionel Clearfield LLC arbitrated under
American Arbitration Ass'n rules. The Panel awarded Bionel more than $230
million in past and future damages, and the reasoning as well as the amount of
the award were made public when the parties sought to enforce/vacate the award.
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