Confidentiality vs. Transparency in International Arbitration: Striking the Right Balance

Introduction

Confidentiality has traditionally been regarded as one of the defining features of international arbitration. Parties often choose arbitration over litigation precisely because proceedings are private, records are not open to the public, and sensitive commercial information can be safeguarded.¹ Confidentiality fosters candor in submissions, protects trade secrets, and helps preserve business relationships. At the same time, the last two decades have witnessed growing calls for greater transparency, particularly in investment treaty arbitration (ISDS) and cases implicating matters of public interest. Critics argue that arbitration’s cloak of secrecy undermines legitimacy, allows inconsistent decision-making, and excludes stakeholders directly affected by arbitral outcomes.²

This tension between confidentiality and transparency presents one of the most significant debates in modern arbitration. This paper explores the competing rationales, analyses institutional rules and treaty-based frameworks, examines case law that has shaped the debate, and evaluates India’s position under domestic and international law. It argues that a context-specific balance is necessary: while commercial arbitration should preserve confidentiality, state–investor disputes involving public resources require enhanced transparency to ensure accountability and legitimacy.

Confidentiality as a Hallmark of Arbitration

Arbitration’s confidential nature distinguishes it from litigation in national courts. Confidentiality serves several key purposes:

1. Protection of Commercial Secrets. Complex commercial disputes often involve proprietary information, trade secrets, and business strategies. Confidential proceedings ensure this information is not exposed to competitors.³

2. Preservation of Party Autonomy. Confidentiality reflects the consensual basis of arbitration. Parties may agree to strict confidentiality clauses in their arbitration agreements, tailoring the process to their needs.

3. Promotion of Settlement. Confidentiality encourages frank dialogue and creative settlement negotiations. Parties may be more willing to compromise when disputes are not scrutinised by the public or media.

4. Reputation Management. Confidentiality allows parties to avoid reputational harm that may arise from the disclosure of disputes, particularly in industries such as finance, technology, and energy.

For these reasons, arbitral institutions such as the LCIA (Article 30 of the LCIA Rules, 2020) and the SIAC Rules (2016) contain default confidentiality provisions, while others such as the ICC provide flexibility by permitting publication of redacted awards with party consent.⁴

The Case for Transparency

While confidentiality offers important advantages, concerns about the legitimacy of arbitration have generated calls for greater transparency. These concerns are particularly acute in investment treaty arbitration, where disputes involve states, taxpayers, and public resources.

1. Public Accountability. When disputes involve regulatory measures, environmental policy, or health laws, secrecy undermines the public’s right to know how state actions are being scrutinized.

2. Consistency of Jurisprudence. Confidentiality hampers the development of consistent precedents. Transparency allows publication of awards, enabling states and investors to understand arbitral reasoning.

3. Legitimacy of the System. Critics of ISDS argue that secret tribunals deciding multi-billion-dollar claims against states lack democratic legitimacy. Transparency is essential to address perceptions of bias and ensure public confidence.

Notably, the UNCITRAL Rules on Transparency in Treaty-based Arbitration (2014) were introduced to address these concerns. They provide for publication of documents, open hearings, and participation of third parties (amicus curiae) in treaty-based disputes unless parties agree otherwise.⁵

Institutional Approaches

Arbitral institutions vary in how they balance confidentiality and transparency.

• ICSID (International Centre for Settlement of Investment Disputes). The ICSID Arbitration Rules (most recently revised in 2022) mandate the publication of awards with party consent, but increasingly allow redacted publication to safeguard sensitive information.⁶

• UNCITRAL. The 2014 Transparency Rules apply automatically to investment treaty arbitrations unless excluded.

• ICC. The ICC Court has moved toward transparency by publishing the names of arbitrators, reasons for certain decisions, and redacted awards in investment disputes.

• LCIA and SIAC. These institutions emphasize confidentiality as default, though SIAC has also begun encouraging publication of anonymized awards.

• HKIAC. The Hong Kong International Arbitration Centre balances confidentiality with transparency by publishing selected awards (with party consent) to contribute to arbitral jurisprudence.

This diversity underscores the absence of uniformity and the need for harmonized approaches.

Case Law Shaping the Debate

Several high-profile ISDS cases illustrate the growing demand for transparency:

1. Yukos v. Russia (PCA, 2014). Involving claims of over USD 50 billion, the Yukos arbitration highlighted the global significance of transparency in cases where state conduct and allegations of expropriation implicate public resources.⁷

2. Philip Morris v. Uruguay (ICSID, 2016). The tobacco giant challenged Uruguay’s public health regulations on cigarette packaging. Given the public health stakes, civil society strongly advocated for transparency, and the tribunal allowed publication of key documents.⁸

3. UP and C.D. Holding v. Hungary (ICSID, 2016). Here too, transparency played a crucial role as the dispute involved state regulation of foreign investment in sectors affecting the public interest.⁹

These cases demonstrate that in disputes involving regulatory sovereignty and public policy, secrecy undermines legitimacy.

India’s Position

India’s approach reflects the dual pressures of promoting investment while safeguarding sovereignty.

India Model BIT (2016).

India’s 2016 Model Bilateral Investment Treaty incorporates provisions on transparency, requiring disclosure of arbitral proceedings and awards, especially when matters involve public interest. This aligns India with the global trend toward transparency in ISDS.¹⁰

Domestic Framework.

Under the Arbitration and Conciliation Act, 1996, confidentiality is protected through Section 42A, inserted by the 2019 amendment. It imposes confidentiality obligations on arbitral institutions, parties, and arbitrators, except where disclosure is necessary for enforcement of awards or required by law.¹¹ While this protects commercial arbitration, it raises questions about whether India’s framework adequately accommodates the need for transparency in state-related disputes.

Striking the Balance: Reconciling Confidentiality and Transparency

The debate is not about choosing one over the other but about identifying where each value should prevail. Commercial arbitrations, involving private parties and sensitive business information, continue to justify confidentiality as a default rule. By contrast, investment treaty arbitrations, where state actions and public resources are at stake, require transparency to ensure legitimacy.

A context-specific approach is therefore desirable. Transparency in ISDS can be achieved through publication of awards, public hearings in exceptional cases, and amicus participation by civil society. At the same time, redaction of sensitive commercial data ensures that legitimate business concerns are not compromised.¹²

Recommendations

1. Context-Specific Transparency. Distinguish between purely commercial arbitration (where confidentiality should prevail) and state–investor arbitration (where transparency is essential).

2. Uniform Standards. Harmonise confidentiality and transparency obligations across institutions to reduce inconsistency and uncertainty.

3. Redacted Awards. Publish awards in investment disputes with sensitive data redacted, balancing commercial secrecy with public accountability.

4. Public Participation. Permit amicus submissions in cases involving environmental regulation, human rights, or public health.

5. Judicial Sensitisation. Domestic courts should interpret confidentiality obligations flexibly in cases where enforcement or public policy requires disclosure.

Conclusion

The tension between confidentiality and transparency is central to the legitimacy of international arbitration. While confidentiality remains indispensable to commercial arbitration, growing public scrutiny of ISDS demands greater openness. The global trend, as seen in the UNCITRAL Transparency Rules, ICSID reforms, and landmark arbitral cases, is toward a balanced model: confidential protection for commercial secrets, but transparency where public resources and sovereign measures are in question.

India’s legal framework, with Section 42A of the 1996 Act and the 2016 Model BIT, reflects this evolving balance but requires clearer differentiation between commercial and treaty-based arbitration. By adopting uniform standards and embracing redacted publication of awards, arbitration can preserve its commercial appeal while ensuring accountability in matters of public interest.

The legitimacy of arbitration in the 21st century will depend not only on efficiency and enforceability but also on its ability to balance the privacy of parties with the transparency demanded by the public.

References

1. Gary Born, International Commercial Arbitration (3rd edn, Kluwer Law International 2021) 2784.

2. Michael Waibel et al (eds), The Backlash Against Investment Arbitration (Kluwer 2010) 47.

3. Julian Lew, Loukas Mistelis & Stefan Kröll, Comparative International Commercial Arbitration (Kluwer 2003) 511.

4. LCIA Arbitration Rules, 2020, Article 30; SIAC Arbitration Rules, 2016, Rule 39.

5. UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, 2014.

6. ICSID Arbitration Rules, 2022, Rule 62.

7. Yukos Universal Ltd. v. Russia, PCA Case No. AA 227 (Final Award, 2014).

8. Philip Morris Brands Sàrl v. Uruguay, ICSID Case No. ARB/10/7 (Award, 2016).

9. UP and C.D. Holding v. Hungary, ICSID Case No. ARB/13/35 (Award, 2016).

10. India Model Bilateral Investment Treaty, 2016, Art. 20.

11. Arbitration and Conciliation Act, 1996, s 42A (as amended in 2019).

12. UNCITRAL Secretariat, Guide on Transparency Rules (2014).