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High Court of Australia |
ESSO AUSTRALIA RESOURCES LTD AND OTHERS v THE HONOURABLE SIDNEY JAMES PLOWMAN
AND OTHERS
F.C. No. 95/014
Number of pages - 30
[1995] HCA 19; (1995) 128 ALR 391
(1995) 69 ALJR 404
(1995) 183 CLR 10
Arbitration
HIGH COURT OF AUSTRALIA
MASON CJ(1), BRENNAN(2), DAWSON(3), TOOHEY(4) AND McHUGH(5) JJ
Arbitration - Agreement - Hearing in private - Implied terms Confidentiality of documents and information disclosed - Documents produced at direction of arbitrator.
ORDER
Appeal dismissed with costs, except in so far as the appeal relates to declarations 6C and 6F.DECISION
MASON CJ This appeal raises the important question whether an arbitrating party is under an obligation of confidence in relation to documents and information disclosed in, and for the purposes of, a private arbitration. The question, in the context of this case, has its genesis in two agreements for the sale of natural gas from the Bass Strait fields to two public utilities, the Gas and Fuel Corporation of Victoria ("GFC") and the State Electricity Commission of Victoria ("SEC"). The first agreement dated 1 January 1975 was with GFC. It was amended on three occasions, the last occasion being by a deed dated 14 February 1986. The second agreement dated 30 July 1981 was with SEC. It was also amended on three occasions, the last occasion being by deed dated 3 August 1990. The other parties to the agreements, the vendors of the natural gas, are the first and second appellants. By deed dated 1 January 1988, the second appellant assigned its rights and obligations under the second agreement to the third appellant, BHP Petroleum (Bass Strait) Pty. Ltd. The three appellants were described as "Esso/BHP" in the courts below.
2. Each of the sales agreements contained a clause whereby the price payable
for the gas sold was to be adjusted by taking into
account changes relating to
royalties and taxes attributable to the production or supply of gas (1).
3. Clause 12.8 of the GFC Sales Agreement provides, amongst other things:
"Any such increases or decreases shall be effective upon the imposition
thereof. In the event of any such increase or decrease Sellers
shall provide
Buyer with details of the increase or decrease and the method and distribution
of such royalties, taxes, rates, duties
or levies".
Clause 19.5 of the SEC Sales Agreement was in similar terms. It specifically
required the sellers to state "the amount and date
as of which such increase
or decrease is effective".
4. In November 1991, the appellants sought from the two public utilities an
increase in the price of gas supplied to them since
1 July 1990, the increase
being attributable, so it was claimed, to the imposition of a new tax, the
"Petroleum Resource Rent Tax",
which was imposed from that date following the
abolition of a royalty previously payable by the vendor on gas produced. The
utilities
refused to pay. Pursuant to arbitration clauses in the sales
agreements, the appellants referred the disputes to arbitration. It
seems
that the appellants did not provide the information required by cll.12.8 and
19.5 before referring the disputes to arbitration.
5. On 1 June 1992, the predecessor of the first respondent, the Minister for
Energy and Minerals, brought an action against the
appellants and the two
utilities seeking a declaration "that any and all information disclosed to
(GFC) in the course of its arbitration
with (the appellants) is not subject to
any obligation of confidence". The Minister sought a similar declaration in
relation to
information disclosed to SEC in the course of its arbitration. By
way of counterclaim, the appellants sought declarations, based
on implied
terms, that each arbitration:
"is to be conducted in private and that any documents or information supplied
by any of the parties to any other party thereto in
or for the purpose thereof
are to be treated in confidence as between each such party and the arbitrators
and umpire except for the
purpose of the arbitration".
Both GFC and SEC brought a cross-claim against the appellants seeking
declarations in the same terms as the declarations sought by
the Minister.
6. At the beginning of the hearing of the action, the Minister's counsel, by
leave, sought amended declarations. The amended declarations
sought in the
GFC arbitration were in these terms:
"A. In respect of the arbitration between (Esso/BHP) and (GFC), a declaration
that there is no implied term of the 1975 Sales Agreement
requiring that the
arbitration be private in the sense that any person not taking part in the
arbitration is excluded from the hearing
unless he or she has the permission
of all parties to the arbitration to be present.
7. B. In respect of the arbitration between (Esso/BHP) and (GFC), a
declaration that there is no implied term of the 1975 Sales
Agreement imposing
an obligation of confidentiality upon (GFC).
8. C. In respect of the arbitration between (Esso/BHP) and (GFC), a
declaration that there is no implied term of the 1975 Sales
Agreement imposing
an obligation upon (GFC) not to disclose to third parties not party to the
arbitration any of the following -
(a) pleadings, other documents, evidence and transcript;
The Minister's counsel sought similar amended declarations in the SEC
arbitration.
9. On the last day of the hearing, the Minister's counsel submitted that, in
the case of the GFC arbitration, the declaration should
take the following
form:
"1. GFC is not restricted from disclosing to the Minister and third persons
information provided to it by Esso/BHP pursuant to
their obligation under
Clause 12.8 of the 1975 Sales Agreement to provide to GFC details of the
increase or decrease and the method
and distribution of such royalties, taxes,
rates, duties or levies.
2. There is no express or implied term of the 1975 Sales Agreement that
restricts disclosure to the Minister and third persons of
information obtained
by GFC in the course of or by reason of arbitration pursuant to the 1975 Sales
Agreement.
3. GFC is not restricted from disclosing information to the Minister and
third persons by reason only that -
(a) the information was obtained by it from Esso/BHP in the courseof or by reason of arbitration pursuant to the 1975 Sales Agreement; and
(b) the information has not otherwise been published."Likewise, the Minister's counsel sought similar declarations in relation to the SEC arbitration.
10. The claims for confidentiality arise out of the appellants' response to
requests by the Minister, GFC and SEC for details of
the calculations on which
the appellants' claims for price increases are based. The appellants declined
to give details unless GFC
and SEC entered into agreements that they would not
disclose the information to anyone else, including the Minister, the Executive
Government and the people of Victoria. The appellants asserted that the
details sought were commercially sensitive. On the other
hand, the Executive
Government wants the details and claims that, if GFC and SEC obtain them, GFC
and SEC are under a statutory duty
to pass them on.
11. Clause 4(2) of the "Business and Rules" component of the Sixth Schedule
to the State Electricity Commission Act 1958 (Vict.) gave the Minister power
to obtain information from SEC. The sub-clause, which has subsequently been
repealed, provided:
"For the proper conduct of his public business the Minister shall be
entitled at all times to put himself into direct communication
with all
officers and employes of the Commission and also to see all documents papers
and minutes which he requires either for Parliament
or himself and to be
supplied with copies thereof, and also to avail himself of the services and
assistance of any officer or employe."
The Minister was not given a similar power in relation to GFC under the Gas
and Fuel Corporation Act 1958 (Vict.).
The proceedings at first instance
12. The primary judge (Marks J) held that, under cll.12.8 and 19.5 of the
respective agreements, the appellants were obliged to
furnish details of the
increases sought under those provisions. The primary judge made an order that
the details be provided to
GFC and SEC respectively and refused an application
by the appellants that the furnishing of those details be stayed until the
utilities
entered into a confidentiality agreement.
13. Having dealt with those aspects of the case, the primary judge then
directed his attention to questions concerning the privacy
of the arbitration
and confidentiality. The first question was whether strangers could attend
the arbitration hearings without the
consent of the parties. The second
question was whether a party was at liberty to disclose information imparted
to it in the course
of the arbitration. The third question was whether GFC and
SEC were at liberty to disclose information provided pursuant to cll.12.8
and
19.5.
14. His Honour declined to grant a declaration on the first question on the
ground that there was no issue between the parties as
to whether the
arbitrations were to be private. His Honour decided the third question by
refusing the declarations sought by the
appellants and by making six
declarations in terms substantially similar to those sought by the Minister on
the last day of the hearing.
His Honour went on to conclude "that the mere
fact that parties to a dispute agree impliedly or expressly to have it
arbitrated
in private does not import any legal or equitable obligation not to
disclose to third parties any information at all which may be
said to have
been obtained by virtue of or in the course of the arbitration". His Honour
also concluded that there was no general
legal or equitable obligation
applicable to private arbitration which precluded a party to arbitration from
using information obtained
in the course of it except for the purposes of the
arbitration. In this respect, his Honour considered that the court is able to
protect a party (even to an arbitration) against misuse of information which
has been obtained by virtue of the arbitration but the
existence of power to
restrain such misuse did not justify the making of the grant of relief in
general terms such as was sought
by the appellants in the present proceedings.
15. In the result, apart from dismissing the summonses for the order for a
stay with costs, dismissing the counterclaim and making
orders for the
provision of the details pursuant to cll.12.8 and 19.5, the primary judge made
the six declarations sought by the
Minister (referred to in this judgment and
in the courts below as declarations 6A to 6F), and ordered the appellants to
pay the costs
of the Minister and the utilities of the claim, counterclaim and
cross-claims.
The Appeal Division
16. The Appeal Division of the Supreme Court of Victoria (Brooking, Tadgell
and Smith JJ) allowed an appeal by Esso/BHP (2). The
Appeal Division made an
order staying, pending further order, the proceedings commenced by GFC and SEC
respectively against the appellants
for the provision of details pursuant to
cll.12.8 and 19.5 respectively of the sales agreements, set aside the orders
for the provision
of details pursuant to those clauses and also set aside
declarations 6A, 6B, 6D and 6E, thereby leaving on foot only declarations
6C
and 6F, to which I shall shortly refer. The Appeal Division set aside the
order for costs made by the primary judge and in lieu
thereof ordered that the
appellants pay two- thirds of the costs, including reserved costs, of the
other parties of the action, including
the counterclaim, and of the
proceedings between the defendants other than the application for a stay. The
Appeal Division also
ordered the appellants to pay two-thirds of the costs of
the Minister of the appeal, and one-half of the costs of the other respondents
of the appeal including, in each case, any reserved costs.
17. By majority (Brooking J, with whom Smith J agreed), the Appeal Division
left the following declarations on foot:
"6C. (GFC) is not restricted from disclosing information to the Minister and
third persons by reason only that:-
(a) the information was obtained by it from Esso/BHP in the courseof or by reason of arbitration pursuant to the 1975 Sales Agreement; and
(b) the information has not otherwise been published.""6F. SEC is not restricted from disclosing information to the Minister and third persons by reason only that:-
(a) the information was obtained by it from Esso/BHP in the courseof or by reason of arbitration pursuant to the 1981 Sales Agreement; and
(b) the information has not otherwise been published."Tadgell J, who otherwise agreed with the reasons for judgment of Brooking J, considered that declarations 6C and 6F should be set aside. Tadgell J considered that declarations should not have been made in the absence of knowledge of the nature of the relevant information. The terms of the two declarations did not indicate what information it was that the utilities were entitled to disclose.
Nature of information to be disclosed by the producers for the purpose of the
arbitrations
18. Although the courts below made no findings as to the nature of the
information likely to be disclosed by the producers for the
purpose of the
arbitrations, an affidavit by Mr Bloking, Gippsland Gas Marketing Manager of
the first appellant, gives some indication
of what might be involved. He says
that Esso/BHP believe that a considerable amount of documents and information
may need to be
disclosed concerning Esso/BHP's Bass Strait operations. He
says, without being exact, the following categories of information are
likely
to be revealed:
"Cost information relating to the production of all petroleum products. Price,
volume and revenue information relating to the sale
of all petroleum
products.
Accounting and financial information relating to (Esso/BHP's) accounts of the
Bass Strait operations.
Technical operating information relating to (Esso/BHP's) gas producing
operations.
Reserves information relating to gas supplies in Bass Strait hydrocarbon
reservoirs.
Marketing information relating to contract negotiations and settlements
concerning (Esso/BHP) and their customers."
19. Mr Bloking also claims that each of these categories contains numerous
sub-categories, many of which contain information of
a private, confidential
or commercially sensitive nature. Other categories, he says, include
proprietary technical information relating
to operations of the Bass Strait
Project. Further, it is claimed that the compilation of this information in
meaningful form, at
the cost of time, money and employment of expertise, has
provided the producers with "a significant competitive advantage" which
would
be lost if it were disclosed publicly because comparable information on
competitors would not be available to the producers.
20. We have been informed that, in the SEC arbitration, the arbitrator has
directed the parties to exchange witness statements.
The GFC arbitration has
not yet reached that stage.
Arguments of the parties
21. The appellants submit:
(1) that the Appeal Division was correct in holding that an arbitration
agreement includes a term implied by law that the arbitration
be conducted in
private in that strangers are to be excluded from the hearing;
(2) that it is an incident of a private arbitration that a party is not
entitled to disclose, otherwise than for the purposes of
the arbitration,
information and documents disclosed to that party by the opposing party for
the purposes of the arbitration with
which that party would not otherwise have
been supplied, unless disclosure is authorized by statute;
(3) that a duty of confidence is imposed by equity where:
(a) the information has the necessary quality of confidence about it; andobligation of confidence;
(b) the information has been imparted in circumstances importing an
22. The appellants now claim that they are entitled to declarations in
relation to the GFC arbitration in the following form:
1) that it is an implied term of the arbitration agreement, which is cl.23 of
the 1975 Sales Agreement, that GFC is not entitled
to disclose, otherwise than
for the purpose of the arbitration pursuant to that Agreement, information and
documents disclosed to
GFC by the appellants for the purposes of the
arbitration with which GFC would not otherwise have been supplied unless
disclosure
is authorized by statute;
(2) that GFC is bound not to disclose, otherwise than for the purposes of the
arbitration pursuant to the 1975 Sales Agreement,
information and documents
disclosed to GFC by the appellants for the purposes of the arbitration with
which GFC would not otherwise
have been supplied unless disclosure is
authorized by statute.
Similar declarations are sought in relation to the SEC arbitration.
23. The respondents' submissions are:
(1) that a restriction upon disclosure does not follow from an obligation of
privacy, assuming such an obligation to exist;
(2) that an implied term restricting disclosure of information is not an
incident of all private arbitrations and cannot be supported
on grounds of
necessity, reasonableness or common sense;
(3) that no equitable obligation of confidence arises because:
(a) it is not enough to sustain such an obligation that the information is
not in the public domain; it must be secret and be
important that it be kept
secret;
(b) the mere fact that information is provided during an arbitration does
not make it confidential; and
(c) there is nothing to show that disclosure will cause detriment to the
appellants.
Privacy of arbitration
24. The Minister contends that the true position is that it is for the
arbitrator to decide whether the hearing is to be private
or not. The
argument is that the question whether the hearing is to be private or
otherwise is a matter of procedure and thus falls
within the arbitrator's
power to decide matters of procedure.
25. It is well settled that when parties submit their dispute to a private
arbitral tribunal of their own choice, in the absence
of some manifestation of
a contrary intention, they confer upon that tribunal a discretion as to the
procedure to be adopted in reaching
its decision (3). No doubt the conferral
of that power upon the tribunal is incidental to the power which it is given
to determine
the dispute submitted to the tribunal. Section 14 of the
Commercial Arbitration Act 1984 (Vict.) specifically empowers the arbitrator
or umpire to:
"conduct proceedings under (the) agreement in such manner as the arbitrator or
umpire thinks fit".
That provision replaced earlier statutory provisions, the effect of which was
to enable arbitrators to give directions as to procedural
matters. However,
independently of statute, arbitrators had authority to exercise that power.
26. There is no reason to doubt that an arbitrator, in the exercise of power
with respect to procedural matters, can decide who
shall be present at the
hearing of the arbitration (4). But that power is not a free- standing power;
it is a power to decide who
is entitled to attend, having regard to the
provisions of the relevant contract.
27. Subject to any manifestation of a contrary intention arising from the
provisions or the nature of an agreement to submit a dispute
to arbitration,
the arbitration held pursuant to the agreement is private in the sense that it
is not open to the public. One writer
has asserted that total privacy of the
proceedings is one of the advantages of arbitration (5). The arbitrator will
exclude strangers
from the hearing unless the parties consent to attendance by
a stranger (6). Persons whose presence is necessary for the proper
conduct of
the arbitration are not strangers in the relevant sense. Thus, persons
claiming through or attending on behalf of the
parties, those assisting a
party in the presentation of the case, and a shorthand writer to take notes
may appear (7). It does not
matter much whether this characteristic of privacy
is an ordinary incident of the arbitration, that is, an incident of the
subject-matter
upon which the parties have agreed, or whether it is an implied
term of the agreement. For the most part, the authorities refer
to it as an
implied term. But, for my part, I prefer to describe the private character of
the hearing as something that inheres in
the subject-matter of the agreement
to submit disputes to arbitration rather than attribute that character to an
implied term. That
view better accords with the history of arbitrations. In
Hassneh Insurance v. Mew, Colman J said (8):
"If the parties to an English law contract refer their disputes to
arbitration they are entitled to assume at the least that the
hearing will be
conducted in private. That assumption arises from a practice which has been
universal in London for hundreds of
years and (is), I believe, undisputed. It
is a practice which represents an important advantage of arbitration over the
Courts as
a means of dispute resolution. The informality attaching to a
hearing held in private and the candour to which it may give rise
is an
essential ingredient of arbitration".
Confidentiality
28. As the statement just quoted makes clear, the efficacy of a private
arbitration as an expeditious and commercially attractive
form of dispute
resolution depends, at least in part, upon its private nature (9). Hence the
efficacy of a private arbitration will
be damaged, even defeated, if
proceedings in the arbitration are made public by the disclosure of documents
relating to the arbitration.
As one text writer has observed (10):
"There would be little point in excluding the public from an arbitration
hearing if it were open to a party to make public, for example
in the press,
or on television, an account of what was said or done at the hearing. It is
suggested that a party would be entitled
to an injunction to restrain the
other party from such publication. And the same principle must apply to the
arbitration as a whole,
including the pleadings or statements of case, expert
reports or witness proofs that have been exchanged, as well as to evidence
given orally at a hearing."
29. It was on this basis that the English Court of Appeal, in Dolling-Baker
v. Merrett (11), restrained a party to an arbitration
from disclosing on
discovery in a subsequent action documents relating to the arbitration. The
documents consisted of documents prepared
for or used in the arbitration,
transcripts and notes of evidence given and the award(12). Parker LJ (with
whom Ralph Gibson and
Fox LJJ agreed), after referring to "the essentially
private nature of an arbitration", said(13):
"As between parties to an arbitration, although the proceedings are consensual
and may thus be regarded as wholly voluntary, their
very nature is such that
there must ... be some implied obligation on both parties not to disclose or
use for any other purpose any
documents prepared for and used in the
arbitration, or disclosed or produced in the course of the arbitration, or
transcripts or
notes of the evidence in the arbitration or the award, and
indeed not to disclose in any other way what evidence had been given by
any
witness in the arbitration, save with the consent of the other party, or
pursuant to an order or leave of the court."
Parker LJ went on to emphasize that the obligation arose out of the "nature of
arbitration itself". The fact that a document is
used in an arbitration does
not confer on it any confidentiality or privilege which can be availed of in
subsequent proceedings but,
in considering a question as to production of
documents or discovery by list or affidavit, the court must nevertheless have
regard
to the obligation. However, Parker LJ concluded that, if the court is
satisfied that, despite the implied obligation, discovery
and inspection are
necessary for the fair disposal of the action, discovery and inspection must
take place, though other means of
achieving a similar result should be taken
into account (14).
30. On the other hand, the Minister argues that, while it is one thing to say
that the hearing is private in the sense that strangers
are excluded, it is
another thing to say that it is confidential (15). The Minister points to the
fact that, before Dolling-Baker,
there was no decision suggesting that an
arbitration hearing was confidential as distinct from private. Further, in
Australia and
the United States, there is no support in the decided cases for
the existence of such an obligation of confidence. Indeed, in the
United
States, the decided cases are inconsistent with the proposition that
confidentiality is a characteristic of arbitration proceedings
(16) and, in
Australia, there is a decision implicitly denying the existence of an
obligation of confidentiality (17). And members
of the profession with
experience in the field of arbitration have expressed in this very case
conflicting views on the question
whether the parties come under an obligation
not to disclose the proceedings. To that may be added the comment that, if
such an
obligation had formed part of the law, one would have expected it to
have been recognized and enforced by judicial decision long
before
Dolling-Baker.
31. Moreover, it has to be acknowledged that, for various reasons, complete
confidentiality of the proceedings in an arbitration
cannot be achieved.
First, it is common ground between the parties that no obligation of
confidence attaches to witnesses who are
therefore at liberty to disclose to
third parties what they know of the proceedings. Secondly, there are various
circumstances in
which an award made in an arbitration, or the proceedings in
an arbitration, may come before a court involving disclosure to the
court by a
party to the arbitration and publication of the court proceedings. Thus, by
leave of the Supreme Court, an award made
under an arbitration agreement may
be enforced in the same manner as a judgment or order of that Court to the
same effect (18). An
award may become subject to judicial review (19). The
Supreme Court may determine a preliminary point of law arising in the
arbitration
(20), and may remove an arbitrator or umpire (21). And the Court
has the same power to make interlocutory orders for the purposes
of and in
relation to arbitration proceedings as it has for the purposes of and in
relation to proceedings in the Court (22). Thirdly,
there are other
circumstances in which an arbitrating party must be entitled to disclose to a
third party the existence and details
of the proceedings and the award. An
arbitrating party may be bound under a policy of insurance to disclose to the
insurer matters
involved in the arbitration proceedings which are material to
the risk insured against. Likewise, an arbitrating party may be obliged
to
disclose the existence and nature of arbitration proceedings as well as the
award made in the proceedings because the disclosure
is necessary in order to
state accurately what are the assets and liabilities of the party or to give
an indication of its future
prospects. Such a disclosure may be necessary in
order to comply with the statutory requirements regulating the provision of
financial
information by corporations or with stock exchange requirements or
simply because a company considers that it is desirable that its
shareholders
and the market should have up-to-date information concerning the company's
affairs.
32. The illustrations just given are but some of the instances in which a
party to an arbitration could legitimately and justifiably
disclose the
proceedings, or some aspect of the proceedings, of an arbitration. Granted the
various circumstances in which disclosure
can legitimately take place, two
questions necessarily arise. First, is there a legal basis for holding that
there is an obligation
not to disclose? Secondly, if so, how is the
obligation to be defined and what are the exceptions to it?
33. An obligation not to disclose may arise from an express contractual
provision. If the parties wished to secure the confidentiality
of the
materials prepared for or used in the arbitration and of the transcripts and
notes of evidence given, they could insert a
provision to that effect in their
arbitration agreement. Importantly, such a provision would bind the parties
and the arbitrator,
but not others. Witnesses, for example, would be under no
obligation of confidentiality.
34. Absent such a provision, it is difficult to resist the conclusion that,
historically, an agreement to arbitrate gave rise to
an arbitration which was
private in the sense that strangers were not entitled to attend the hearing.
Privacy in that sense went
some distance in bringing about confidentiality
because strangers were not in a position to publish the proceedings or any
part of
them. That confidentiality, though it was not grounded initially in
any legal right or obligation, was a consequential benefit or
advantage
attaching to arbitration which made it an attractive mode of dispute
resolution. There is, accordingly, a case for saying
that, in the course of
evolution, the private arbitration has advanced to the stage where
confidentiality has become one of its essential
attributes so that
confidentiality is a characteristic or quality that inheres in arbitration.
35. Despite the view taken in Dolling-Baker and subsequently by Colman J in
Hassneh Insurance, I do not consider that, in Australia,
having regard to the
various matters to which I have referred, we are justified in concluding that
confidentiality is an essential
attribute of a private arbitration imposing an
obligation on each party not to disclose the proceedings or documents and
information
provided in and for the purposes of the arbitration.
36. The appellants' argument was designed to establish that an agreement to
arbitrate contains an implied term that each party will
not disclose
information provided in and for the purposes of the arbitration. The argument
was that the implication was to be made
as a matter of law in all private
agreements for arbitration unless presumably the agreement provided otherwise.
There is a clear
distinction between implying a term in a contract as a matter
of law and implying a term in order to give business efficacy to a
contract.
The distinction was discussed by the House of Lords in Liverpool City Council
v. Irwin (23), particularly by Lord Wilberforce
(24). The implication of a
term as a matter of law is made by reference to "the inherent nature of a
contract and of the relationship
thereby established", to use the words of
Lord Wilberforce (25). As Deane J pointed out in Hawkins v. Clayton (26), his
Lordship
focused on the nature of the contract and formulated the relevant
test in terms of what is necessary or required in the circumstances
on the
footing that "such obligation should be read into the contract as the nature
of the contract itself implicitly requires, no
more, no less" (27).
37. It follows that the case for an implied term must be rejected for the
very reasons I have given for rejecting the view that
confidentiality is an
essential characteristic of a private arbitration. In the context of such an
arbitration, once it is accepted
that confidentiality is not such a
characteristic, there can be no basis for implication as a matter of
necessity. In Hassneh Insurance,
Colman J said of the obligation of
confidentiality that (28):
"(t)he implication of the term must be based on custom or business efficacy."
In my view, for the reasons already stated, this approach must also be
rejected.
38. In the light of the conclusion which I have reached, I do not need to
consider whether the difficulties in defining the exceptions
to any implied
term forbidding disclosure are such as to preclude the implication of such a
term. That the difficulties are considerable
was acknowledged both by the
Court of Appeal in Dolling-Baker and by Colman J in Hassneh Insurance. Colman
J thought that a qualification
could be formulated along the lines of the
exceptions to a bank's duty of confidentiality, which had been discussed by
the members
of the English Court of Appeal in Tournier v. National Provincial
and Union Bank of England (29). In that case, the formulations
of these
exceptions differed to some extent. Colman J expressed the qualification
applicable to arbitration agreements in these
terms (30):
"If it is reasonably necessary for the establishment or protection of an
arbitrating party's legal rights vis-a-vis a third party,
in the sense which I
have described, that the award should be disclosed to that third party in
order to found a defence or as the
basis for a cause of action, so to disclose
it would not be a breach of the duty of confidence."
For my part, if an obligation of confidence existed by virtue of the fact that
the information was provided in and for the purposes
of arbitration, this
statement of the qualification seems unduly narrow. It does not recognize
that there may be circumstances,
in which third parties and the public have a
legitimate interest in knowing what has transpired in an arbitration, which
would give
rise to a "public interest" exception. The precise scope of this
exception remains unclear.
39. The courts have consistently viewed governmental secrets differently from
personal and commercial secrets (31). As I stated
in The Commonwealth of
Australia v. John Fairfax and Sons Ltd. (32), the judiciary must view the
disclosure of governmental information
"through different spectacles". This
involves a reversal of the onus of proof: the government must prove that the
public interest
demands non-disclosure (33).
40. This approach was not adopted by the majority of the House of Lords in
British Steel Corporation v. Granada Television Ltd.
(34), where the
confidential documents in question revealed the internal mismanagement of a
statutory authority. In passing, the
majority attributed to the public
interest exception a very narrow scope, stating that, although disclosure was
of public interest,
it was not in the public interest (35). I would not
accept this view. The approach outlined in John Fairfax should be adopted when
the information relates to statutory authorities or public utilities because,
as Professor Finn notes (36), in the public sector
"(t)he need is for
compelled openness, not for burgeoning secrecy". The present case is a
striking illustration of this principle.
Why should the consumers and the
public of Victoria be denied knowledge of what happens in these arbitrations,
the outcome of which
will affect, in all probability, the prices chargeable to
consumers by the public utilities?
An implied undertaking not to disclose documents made available in an
arbitration as on discovery
41. In relation to documents produced by one party to another in the course
of discovery in proceedings in a court, there is an
implied undertaking,
springing from the nature of discovery, by each party not to use any document
disclosed for any purpose otherwise
than in relation to the litigation in
which it is disclosed (37). Over a century ago, Bray on Discovery stated
(38):
"A party who has obtained access to his adversary's documents under an order
for production has no right to make their contents
public or communicate them
to any stranger to the suit ... nor to use them or copies of them for any
collateral object ... If necessary
an undertaking to that effect will be made
a condition of granting an order".
Because an undertaking is implied, it has not been the practice to condition
the making of orders in that way. The implied undertaking
is subject to the
qualification that once material is adduced in evidence in court proceedings
it becomes part of the public domain,
unless the court restrains publication
of it.
42. It would be inequitable if a party were compelled by court process to
produce private documents for the purposes of the litigation
yet be exposed to
publication of them for other purposes. No doubt the implied obligation must
yield to inconsistent statutory provisions
and to the requirements of curial
process in other litigation, e.g. discovery and inspection, but that
circumstance is not a reason
for denying the existence of the implied
obligation.
43. The next step is to say that a similar obligation arises in an
arbitration. In England it has been held that, because the parties
to an
English law arbitration submit to the possibility that the English discovery
procedure will apply to their arbitration, by
implication they must be
mutually obliged (39):
"to accord to documents disclosed for the purposes of the arbitration the same
confidentiality which would attach to those documents
if they were litigating
their disputes as distinct from arbitrating them".
I see no reason to disagree with this statement. But, consistently with the
principle as it applies in court proceedings, the obligation
of
confidentiality attaches only in relation to documents which are produced by a
party compulsorily pursuant to a direction by the
arbitrator. And the
obligation is necessarily subject to the public's legitimate interest in
obtaining information about the affairs
of public authorities. The existence
of this obligation does not provide a basis for the wide- ranging obligation
of confidentiality
which the appellants seek to apply to all documents and
information provided in and for the purposes of an arbitration. If the
judgments
in Dolling-Baker and Hassneh Insurance are to be taken as expressing
a contrary view, I do not accept them.
Protection of confidential information
44. In argument, reference was made to the principles governing the
protection of confidential information generally. No doubt
these principles
may have some application to information in arbitration proceedings. But
these principles do not support the broad
claim for confidentiality made by
the appellants.
Declarations 6C and 6F
45. In the light of the views which I have expressed, the generality of
declarations 6C and 6F may create problems. I would remit
the matter to the
Supreme Court of Victoria to reformulate the declarations or make such orders
as may be appropriate in the light
of these reasons.
Conclusion
46. In the result I would dismiss the appeal with costs, subject to remitter
of the matter to the Supreme Court of Victoria to reformulate
declarations 6C
and 6F or to make such orders as may be appropriate in the light of these
reasons.
BRENNAN J For the reasons which the Chief Justice gives, I agree that, when one party produces documents or discloses information to an opposing party in an arbitration that is to be heard in private, the documents or information are not clothed with confidentiality merely because of the privacy of the hearing. Nor does the use of a document in such proceedings make the document confidential. I agree also that absolute confidentiality of documents produced and information disclosed in an arbitration is not a characteristic of arbitrations in this country. Accordingly, a party who enters into an arbitration agreement is not taken merely on that account to have contracted to keep absolutely confidential all documents produced and information disclosed to that party by another party in the arbitration.
2. If a party to an arbitration agreement be under any obligation of
confidentiality, the obligation must be contractual in origin.
A term
imposing an obligation of confidentiality could be expressed in an arbitration
agreement but such a term would be unusual.
Nor is such an obligation imposed
by the Commercial Arbitration Act 1984 (Vic.). A term is implied only where,
inter alia, it is necessary (40) to give to the contract "such business
efficacy as the parties
must have intended" (41). The intended business
efficacy must be inferred "from the very nature of the transaction" (42). The
parties
may not have consciously adverted to the subject matter of the term
which is said to be implied, but implication is determined according
to their
presumed intention (43). Obligations which, if proposed to the parties when
they entered into their contract, would not
have been accepted by both are not
thereafter implied in the contract (44).
3. Some obligation of confidentiality could be implied simply from the fact
that, when a party claims the production of documents
or the disclosure of
information under an arbitration agreement for the purposes of the
arbitration, the production or disclosure
is given solely for that purpose. A
duty to produce a document or to disclose information to another party,
whether pursuant to
an express stipulation or pursuant to the arbitrator's
power to order discovery or production, is a duty imposed for the purposes
of
the arbitration (45). Production of documents or disclosure of information is
not given to a party to be used for whatever purpose
the party chooses. The
duty to produce documents or to disclose information to another is an invasion
of a party's right to keep
the documents and information confidential and the
burden of that duty would be increased beyond that contracted for if there
were
no restriction on the other party's freedom to disseminate the documents
and information (46). To give business efficacy to the limited
purpose of
production or disclosure, an undertaking of confidentiality must be implied.
But it does not follow that an undertaking
of absolute confidentiality is to
be implied. At the time when the arbitration agreement was entered into, the
party who is to receive
the documents or information may have been in such a
situation that it would be unreasonable to predicate of that party an
intention
to keep absolutely confidential the documents produced or the
information disclosed. To the extent that a party would not have agreed
to
keep documents or information confidential, the implied obligation of
confidentiality must be qualified.
4. Where a party is in possession of a document or information and is under a
duty at common law or under statute to communicate
the document or information
to a third party, no contractual obligation of confidentiality can prohibit
the performance of that duty
(47). Moreover, a party may be under a duty, not
necessarily a legal duty, to communicate documents or information to a third
party
who has an interest in the progress or outcome of the arbitration. To
take an example, it could not be supposed, in the absence
of a clear contrary
indication, that a party which is a wholly owned subsidiary of a holding
company intended to keep confidential
from its holding company documents or
information relating to the matter in dispute in the arbitration. Nor could a
party be taken
to have intended that it would keep confidential documents or
information which it wished to reveal for the protection of its own
interests.
Nor could a party be taken to have intended that it would keep confidential
documents or information when the party has
an obligation, albeit not a legal
obligation, to satisfy a public interest - more than mere curiosity - in
knowing what is contained
in the documents or information.
5. A question of confidentiality arose in Tournier v. National Provincial and
Union Bank of England (48), where Bankes LJ held that
a banker's implied
obligation of confidentiality with respect to a customer's account and affairs
was qualified "(a) Where disclosure
is under compulsion by law; (b) where
there is a duty to the public to disclose; (c) where the interests of the bank
require disclosure;
(d) where the disclosure is made by the express or implied
consent of the customer". Scrutton LJ(49) and Atkin LJ(50) put the
qualifications
in slightly different terms. This case was relied on by Colman
J in Hassneh Insurance v. Mew (51). His Lordship said (52):
" In my judgment a similar qualification must be implied as a matter of
business efficacy in the duty of confidence arising under
an agreement to
arbitrate."
I would imply an obligation of confidentiality as a matter of business
efficacy but limit the implication by reason of the likelihood
that one or
other party would have reserved the right to disseminate otherwise
confidential material in certain situations. But,
in substance, I
respectfully agree with his Lordship's observation as to the qualification of
the obligation of confidentiality.
6. I would hold that, in an arbitration agreement under which one party is
bound to produce documents or disclose information to
the other for the
purposes of the arbitration and in which no other provision for
confidentiality is made, a term should be implied
that the other party will
keep the documents produced and the information disclosed confidential except
(a) where disclosure of the
otherwise confidential material is under
compulsion by law; (b) where there is a duty, albeit not a legal duty, to the
public to
disclose; (c) where disclosure of the material is fairly required
for the protection of the party's legitimate interests; and (d)
where
disclosure is made with the express or implied consent of the party producing
the material.
7. To imply an obligation of qualified confidentiality in this way
substantially equates the contractual obligation of a party under
an
arbitration agreement with the obligation of a party who impliedly gives an
undertaking of confidentiality to the court when obtaining
an order for
discovery in an action. The underlying principle in the latter situation is
that a party who obtains the production
of documents or the disclosure of
information for a particular purpose cannot use the documents or information
for a "collateral
or ulterior purpose" (53). That phrase is not used in a
pejorative sense, as Lord Diplock said in Home Office v. Harman (54), but
it
is used -
"merely to indicate some purpose different from that which was the only reason
why, under a procedure designed to achieve justice
in civil actions, (the
solicitor for a party) was accorded the advantage, which she would not
otherwise have had, of having in her
possession copies of other people's
documents."
If the duty of production or disclosure in an arbitration were ordered by a
court, an undertaking to the court to use the documents
produced or
information disclosed only for the purposes of the arbitration would be
implied and would be enforced by proceedings
for contempt. But such an
undertaking "can, in appropriate circumstances, be released or modified by the
court" (55). That dispensing
power is not freely exercised (56), but it will
be exercised when special circumstances appear (57). In the Federal Court,
special
circumstances have been held to exist where "there is a special
feature of the case which affords a reason for modifying or releasing
the
undertaking and (the feature) is not usually present" (58). It is unnecessary
to consider whether the dispensing power should
be so broadly defined. It is
relevant to note only that the obligation enforceable as an undertaking to the
court in the case of
a curial order is not unqualified.
8. In the present case, the Minister has a statutory right under the State
Electricity Commission Act 1958 (Vic.) ("SEC Act") (59) to obtain information
from the State Electricity Commission of Victoria ("SECV"). It is the duty of
SECV
to furnish the Minister with the information required under that
sub-clause and that duty cannot be defeated by any contractual duty
to keep
documents or information confidential. Any implied obligation of
confidentiality must be qualified accordingly. Further,
the Gas and Fuel
Corporation of Victoria ("GFC") and SECV are public authorities (60). They
are engaged in the supply of energy
in the State of Victoria (61). The award
to be made in the respective arbitrations will affect the price of the energy
supplied
by the appellants to GFC and SECV and by them to the public. The
public generally has a real interest in the outcome, and perhaps
in the
progress, of each arbitration which the relevant public authority has a duty
to satisfy. GFC and SECV have a duty - possibly
a legal duty in the case of
SECV (62) but at least a moral duty in the case of both public authorities -
to account to the public
for the manner in which they perform their functions.
Public authorities are not to be taken, prima facie, to have bound themselves
to refrain from giving an account of their functions in an appropriate way:
sometimes by giving information to the public directly,
sometimes by giving
information to a Minister, to a government department or to some other public
authority.
9. The duty to convey information to the public may not operate uniformly
upon each document or piece of information which is given
to GFC or SECV for
the purpose of the particular arbitration. Performance of the duty to the
public is unlikely to require the revelation
of every document or piece of
information. It may be possible to respect the commercial sensitivity of
information contained in particular
documents while discharging the duty to
the public and, where that is possible, the general obligation of
confidentiality must be
respected.
10. The appellants accept that GFC and SECV are at liberty to disclose to the
Minister "if authorized by statute to do so, or for
the purpose of the
arbitrations" documents and information obtained by them from the appellants
in the course of the arbitrations.
That concession fails to qualify the
implied obligation of confidentiality to the extent that, in my opinion,
accords with the intention
that ought to be attributed to GFC and SECV at the
time when they entered into the respective arbitration agreements. GFC and
SECV
are both governed by bodies whose constitution is determined or
substantially determined by the Governor in Council (63). The Minister
may
require GFC to inquire into the steps required, inter alia, to secure the
safe, economical and effective supply of gas and fuel
in Victoria (64), all
financial accounts are to be forwarded to the Minister (65) and the Minister
may direct GFC to provide the
Minister with an annual report on the measures
taken in the previous financial year to monitor its compliance with the Act
and regulations
in relation to the supply of gas (66). The Minister may
direct SECV as to the policies it is to give effect to (67). SECV is to
give
effect to any direction given to it by the Minister as soon as possible and to
report to the Minister thereon (68). SECV is
to operate as far as practicable
in accordance with the criteria established from time to time by the Minister
with respect to efficiency,
economy, safety and reliability (69). The
Minister is responsible for convening the annual general meeting of SECV and
may convene
other meetings at any time (70). The Government of Victoria has a
continuing financial interest in the functioning of both authorities.
In the
ordinary course of administration of the relevant Acts and in the performance
by GFC and SECV of their respective functions,
information on energy matters
would have to be passed from GFC and SECV respectively to the Minister, and
vice versa. Neither GFC
nor SECV could be taken to have impliedly undertaken
to keep confidential from the Government or the Minister documents or
information
relevant to the administration of the energy portfolio. The
implied obligation of confidentiality is qualified accordingly.
11. The limitations on the freedom of GFC and SECV to disclose confidential
information and documents discovered by the appellants
for the purposes of the
arbitration do not accord with declarations which the appellants now seek as
set out in the Chief Justice's
judgment. In the circumstances, I would order
that the matter be remitted to the Supreme Court of Victoria to reformulate
the declarations
or to make such other orders with respect to particular
documents or classes of documents as are appropriate and consistent with
these
reasons for judgment.
DAWSON J I agree with the judgment of the Chief Justice and have nothing to add.
TOOHEY J The background to this appeal, including the relevant provisions of the two sales agreements made between the first and second appellants, on the one hand, and the Gas and Fuel Corporation of Victoria ("GFC") and the State Electricity Commission of Victoria ("SEC") respectively on the other, appears in the judgment of the Chief Justice.
2. The appeal gives rise to three questions, which to a large extent overlap.
The questions may be identified as follows:
1. Whether, by reason of an implied term in an agreement to submit a dispute
to arbitration or because it is inherent in its nature,
an arbitration is to
be conducted in private in the sense that strangers are excluded unless both
parties consent to their presence.
2. Whether arbitrations carry an obligation of confidence imposed on the
parties in relation to all documents and information that
are not already
matters of public knowledge.
3. Whether there is a more limited obligation, not to disclose information in
documents discovered in the course of an arbitration,
comparable to the
obligation in civil litigation not to disclose the contents of discovered
documents except for the purpose of the
litigation.
Privacy
3. Propositions such as the following from Russell on the Law of Arbitration
(71) are stated as if they are self-evident:
"Arbitration is a private tribunal for the settlement of disputes. The
public, therefore, may not be admitted if their admission
is objected to by
either party or the arbitrator."
4. Persons entitled to attend the hearing of an arbitration have been
identified in the following way (72):
"Persons entitled to attend the hearing include the following:
(1) each party - if the party is a company, this will include any officer or
servant whom the company desires to be present;
(2) any person whom any party desires to represent him or it at the hearing.
This may be counsel, solicitor, surveyor or anyone
else. However, if it is the
intention of the party to be represented by solicitor or counsel, he should
notify such intention in
good time so as to enable the opposing party to be
represented by solicitor or counsel if thought fit;
(3) any person whom a party wishes to have present as a witness, or otherwise
to assist in presentation of the party's case;
(4) a shorthand or other notetaker, if the party wishes to have notes taken
for the proper presentation of his case in the instant
arbitration."
5. In this regard there are decisions which Brooking J, in the Appeal
Division of the Supreme Court of Victoria (73), described
as "decisions
dealing with complaints about the exclusion of persons whose presence was said
to be necessary to the proper conduct
of the arbitration by a party" (74).
Those decisions involved the power of an arbitrator to exclude a particular
person from the
hearing, though the person was present at the instance of a
party. While the exclusion of strangers was not directly involved in
any of
these cases, a right to exclude strangers may be inferred from the fact that
what was under attack was the arbitrator's power
to exclude a person who fell
within the categories identified by authors such as Bernstein and Wood as
those entitled to attend.
6. A further relevant line of authority is constituted by those cases which
indicate that two or more arbitrations can only be heard
together with the
consent of the parties. In Oxford Shipping Co. v. Nippon Yusen Kaisha ("The
Eastern Saga") (75) Leggatt J set
aside an arbitrator's order that two
arbitrations be heard together. The decision was based directly on the
privacy of arbitrations,
a concept that "derives simply from the fact that the
parties have agreed to submit to arbitration particular disputes arising
between
them and only between them" (76). In Bibby Bulk Carriers v. Cansulex
Ltd. (77) Hirst J relied on the authority of The Eastern Saga
in saying: "I
accept that the arbitration proceeding is a private one, but this arises
simply and solely as a result of the contract
between the participants".
7. The Eastern Saga must be read in the light of the judgment of Cole J in
Aerospatiale Holdings Australia Pty. Ltd. v. Elspan International
Ltd. (78)
Cole J referred a number of disputes to arbitration. In doing so he appointed
the same person as arbitrator for all disputes
and directed that, unless the
arbitrator decided otherwise, all disputes would be heard together. Privacy
was treated as one factor
to be weighed along with other "material
circumstances" in the exercise of the court's discretion (79). His Honour
distinguished
The Eastern Saga on the ground that in the case before him the
parties to the arbitrations were not in reality different: "Although
they may
technically be 'strangers' to that dispute, there is no realistic sense in
which that is so." (80) Jacobs (81) criticises
Cole J's decision, saying that
its effect is that in New South Wales "the principle of privacy can no longer
be said to apply". In
the present case Brooking J disputed this analysis of
Aerospatiale, stating that Cole J's judgment recognises the importance of
privacy
in arbitrations (82).
8. Whatever the current state of the law with respect to the joint hearing of
arbitrations (on which it is unnecessary to express
an opinion), it is clear,
as Brooking J recognised, that "it is and has been for many years, if not
indeed ever since the emergence
of arbitration, the practice for arbitrations
to be conducted in private" (83). Parties agree to refer their disputes to
arbitration
on the assumption that the hearing will be conducted in private
(84). The law has given effect to this understanding in a number
of ways,
without any clear recognition of it as an independent legal rule. Privacy
should be implied as a term of the agreement
to arbitrate; the implied term is
attached as a matter of law rather than to give business efficacy to the
agreement (85). A term
is implied as a matter of law "as the nature of the
contract itself implicitly requires" (86). The very nature of arbitration
agreements,
the established practice for arbitrations to be conducted in
private and the importance attached to privacy in arbitration hearings
indicate that a term requiring privacy should be implied as a matter of law.
Confidentiality
9. If there is no restraint on a party to an arbitration making public what
was said or done at an arbitration, including the contents
of documents
tendered to the arbitrator, there would be little point in excluding strangers
from an arbitration (87). Effect was
given to this approach in Dolling-Baker
v. Merrett (88) when the English Court of Appeal restrained a party to an
arbitration from
disclosing, in a later action, documents relating to the
arbitration. The Court accepted, however, that if discovery and inspection
of
the documents are necessary for the fair disposition of the later action, they
may be ordered.
10. In the present appeal the respondent Minister sought to draw a
distinction between the privacy attaching to an arbitration hearing
and the
confidentiality attaching to what takes place at such a hearing. While clearly
it is not possible to say that every aspect
of an arbitration is confidential
in every circumstance, no sharp distinction can be drawn between privacy and
confidentiality in
this context. They are, to a considerable extent, two
sides of the same coin. The privacy of an arbitration hearing is not an end
in itself; surely it exists only in order to maintain the confidentiality of
the dispute which the parties have agreed to submit
to arbitration.
11. A distinction between privacy and confidentiality has been drawn in the
context of court proceedings. For example, legislatures
have made provisions
allowing judges to prohibit the publication of evidence given in open court
(89). This may be done in conjunction
with the closing of the court, but the
two need not be done together (90). There is also a line of authority which
suggests that
judges have inherent power to prohibit the publication of
certain matters arising during the trial, such as the identity of witnesses,
even though the matters are raised in open court (91).
12. However no analogy can fairly be drawn between arbitrations and court
proceedings in this regard. The right to publish a report
of court
proceedings is an important common law right that is "vital to the proper
working of an open and democratic society and
to the maintenance of public
confidence in the administration of justice" (92). Thus even a statutory
power to exclude the public
from proceedings will not necessarily abrogate
this common law right (93). Furthermore, when information given in court
proceedings
is protected, it is not the publication per se that is
objectionable, rather it is the contempt of court resulting from disobedience
of the non-publication order. Only publications which interfere with the due
administration of justice will of themselves amount
to a contempt of court
(94). And even when the guiding concern is the "due administration of
justice" rather than the private rights
and interests of parties, there is
still some recognition that the privacy of hearings and the non-publication of
matters raised
at trial to a large extent go together. Thus when a witness
reveals his or her identity at an open court hearing, a previous
non-publication
direction may be taken to have been effectively abandoned
(95).
13. It is true that until Dolling-Baker there had been no English decision
supporting a principle of confidentiality of arbitration
hearings. And the
one Australian decision that touches the point, Alliance Petroleum Australia
NL v. Australian Gas Light Co. (96),
tends to be against the existence of an
obligation of confidentiality. But the lack of authority is inconclusive. No
doubt, it
is possible to infer therefrom the absence of such an obligation
(97). But, equally, it may well be that the long established acceptance
of
privacy has carried with it an assumption of confidentiality, at least in
general terms (98).
14. It is also true that complete confidentiality of the proceedings in an
arbitration cannot be achieved. The Chief Justice gives
illustrations of
circumstances in which a party to arbitration proceedings must be able to
disclose aspects of the proceedings to
others. But the appellants did not
contend for a principle of complete confidentiality. Their counsel said:
"We are not contending that they are secret proceedings, in the sense that
there is an absolute shroud over them at all; we just
say that the documents
and information that are provided for the purposes of this resolution in
private of this private dispute should
be treated as private and not disclosed
except for the purposes of the dispute or as required by law."
15. In this regard it does not advance the matter to refer to such situations
as a party to an arbitration over the building of
his house, being asked by
his wife: "How did it go?" (99) It is not hard to visualise situations in
which disclosure by a party
may be incidental and of no consequence. But the
issue is whether there is a principle of confidentiality upon which one party
may
rely to restrain the disclosure by the other party of information given at
the arbitration which the first party wishes to protect
from disclosure.
Ordinarily, that party will only seek to do so where the disclosure may have
some adverse consequence.
16. Much of the difficulty that has surrounded this litigation since it began
in the Supreme Court of Victoria has stemmed from
the varying forms of
declarations for which the parties have contended. The chameleon-like
character of the declarations has tended
to push the debate into the area of
semantics. Initially the parties took their stands on propositions cast in
virtually absolute
terms. That is, the Minister was arguing for a declaration
that all information disclosed was not subject to any obligation of
confidence,
while the appellants sought declarations that any documents or
information supplied were to be treated in confidence as between the
parties.
These rival contentions were later modified, to take on a more specific shape.
However, they did not assume a final form
until the last day of the hearing in
this Court.
17. As a result of the Appeal Division's decision, there are two declarations
extant and the argument before this Court necessarily
focused on them. They
are:
"6C. (GFC) is not restricted from disclosing information to the Minister and
third persons by reason only that:-
(a) the information was obtained by it from Esso/BHP in the course of or by
reason of arbitration pursuant to the 1975 Sales Agreement;
and
(b) the information has not otherwise been published.""6F. SEC is not restricted from disclosing information to the Minister and third persons by reason only that:-
18. In this regard it is necessary to mention the State Electricity
Commission Act 1958 (Vict.). Clause 4(2) of "Business and Rules" in the Sixth
Schedule to the Act empowered the Minister to obtain from SEC "all documents
papers and minutes which he requires either for Parliament or himself" (100).
There is no comparable provision in the Gas and Fuel
Corporation Act 1958
(Vict.). It is clear that SEC cannot, by declaration, be restricted from
disclosing information to the Minister
which the Minister was entitled to
under the State Electricity Commission Act.
19. In terms of formulation, it is easy enough to express a principle of
non-confidentiality. In effect, that is what the Minister
has done in
declarations 6C and 6F which he seeks to uphold. But it is much harder to
express a principle of confidentiality which
accepts, as it must, that there
are significant exceptions. And this has been the appellants' difficulty from
the outset of this
litigation. A principle of confidentiality, expressed to
be subject to "all just exceptions" or the like, is a principle so nebulous
as
to be hardly a principle at all. Brooking J referred to the problem in these
terms (101):
"But one of the great obstacles to the adoption of the principle of
confidentiality now put forward lies in identifying and stating
the exceptions
which will prove the rule, particularly that permitting disclosure where the
interests of the party require it. I
could not accept a general rule which
was not subject to some such exception, having regard to what I believe occurs
in practice
and to what I believe to be 'equitable'. But in what terms is the
exception to be expressed?"
Later his Honour said (102):
"The difficulty in formulating both the general rule and the exceptions (for
one cannot consider the one without the other) tells
against its recognition."
20. Colman J, in Hassneh, was conscious of the difficulties; nevertheless he
recognised an obligation of confidentiality, saying
(103):
"It is reasonably clear that ... such documents are subject to a duty of
confidence. They are merely the materials which were used
to give rise to the
award which defined the rights and obligations of the parties to the
arbitration. Accordingly, that qualification
to the duty of confidentiality
based on the reasonable necessity for the protection of an arbitrating party's
rights against a third
party cannot be expected to apply to them. It is the
final determination of rights expressed in the award which is pertinent as
against third parties, not the raw materials for that determination. The
relevant exception in the case of such documents is an
order or leave of the
Court."
The duty of confidence to which Colman J referred was a duty which his
Lordship derived from the privacy attached to an arbitration
hearing. He
found that privacy to be an implied term of an agreement to arbitrate (104).
Colman J then went on to say (105) that
"the requirement of privacy must in
principle extend to documents which are created for the purpose of that
hearing". In putting
it that way, his Lordship must be taken as viewing
confidentiality in arbitrations as an aspect of the implied term in an
agreement
to arbitrate, namely, that the hearing shall be held in private.
21. It is curious that while the question of confidentiality in arbitration
proceedings has arisen from time to time, the courts,
until recently, have not
found it necessary to enunciate any relevant principle. In the end the matter
is not one to be resolved
in general terms for it is not possible to formulate
a principle based on complete confidentiality or a complete lack thereof. It
is necessary to focus on particular categories of documents and information.
Nevertheless, this must be done against some background
of principle, even if
only to identify exceptions.
22. In conventional litigation, documents which are disclosed and produced by
one party to another pursuant to the rules of court
relating to discovery of
documents are subject to an implied undertaking that they will not be used for
any purpose other than in
relation to the litigation itself (106). There is
no reason in principle why the same obligation should not attach to documents
produced at the instance of an arbitrator. Indeed, given the private nature of
the arbitration hearing, there is every reason why
the obligation should
attach. In Hassneh Colman J said (107):
"In as much as the parties to an English law arbitration impliedly agree to
use English discovery procedure, or at least to submit
to the possibility that
such procedure will apply, it must by implication be their mutual obligation
to accord to documents disclosed
for the purposes of the arbitration the same
confidentiality which would attach to those documents if they were litigating
their
disputes as distinct from arbitrating them. The fact that the
proceedings are in private lends weight to the necessity for that
implication."
What Colman J said of the position in England applies equally to Australia.
23. Next, there is the award itself and, where applicable, the reasons for
that award. An award may, with the leave of the Supreme
Court, be enforced in
the same manner as a judgment or order of the Supreme Court to like effect
(108). To that extent, as Colman
J observed in Hassneh (109), an award "is at
least potentially a public document for the purposes of supervision by the
Courts or
enforcement in them". In any event, an award gives rise to rights
and obligations between the parties which may be enforced as independent
contractual obligations (110). Furthermore, an award may be challenged in the
courts, by reason of the misconduct of the arbitrator
or for such other reason
as may be available. In these circumstances any duty of confidentiality must
yield to a right in a party
to an award to disclose that award to a third
party where it is reasonably necessary to do so to protect the interests of
the party
under the award.
24. What then of any reasons accompanying an award? The reasons may refer to
the pleadings, the evidence and the arguments. Of
course if there is no
confidentiality attaching to arbitrations, that is of no consequence. If some
confidentiality does attach,
it may be a matter of concern. However, to
require a party seeking to enforce an award (or indeed, to resist enforcement)
to observe
confidentiality may place that party at a considerable
disadvantage. The award may only be fully intelligible when read with the
reasons. Furthermore, the reasoning which led to the terms of the award may
serve to explain those terms and perhaps be a basis of
challenge to the award.
It is therefore necessary to attribute to the reasons the same qualification
attributed to the award, namely,
that they may be disclosed to a third party
where it is reasonably necessary to do so to protect the interests of a party
to the
arbitration.
25. That leaves for consideration whether, despite the qualifications already
mentioned, there is nevertheless some obligation of
confidentiality attaching
to the documents and information emanating from an arbitration. I would find
such an obligation to be
a term implied as a matter of law in commercial
arbitration agreements. The term is implied from the entry by the parties
into a
form of dispute resolution which they choose because of the privacy
they expect to result. If this is said to confuse privacy and
confidentiality, the answer is that they are not distinct characteristics. As
Colman J said in Hassneh (111):
"The disclosure to a third party of (a note or transcript of the evidence)
would be almost equivalent to opening the door of the
arbitration room to that
third party."
Any aspect of disclosure to third parties must infringe the privacy of the
arbitration. Thus, if one party is free to disclose to
a newspaper or media
outlet the progress of an arbitration and the evidence adduced in its course,
the notion of privacy is meaningless.
There must be an underlying principle,
significantly qualified in accordance with these reasons, that a party to an
arbitration
is under a duty not to disclose to a third party documents and
information obtained by reason of the arbitration.
26. Although it did not arise in this appeal, I agree with the Chief Justice
that there is a "public interest" exception to the
principle. But it is
unnecessary and inappropriate to discuss the boundaries of that exception.
Documents discovered in the arbitration
27. The reasons which have led to a broad principle of confidentiality have
answered the question of documents discovered by one
party to another in the
course of the arbitration. But whether or not there is such a principle,
confidentiality clearly attaches
to this category of information.
Conclusion
28. It follows from these reasons that declarations 6C and 6F cannot stand.
The appeal should be allowed and those declarations
set aside. The parties
should be given an opportunity to make written submissions as to the orders
that should be made to give effect
to these reasons. However, I would not
dissent from the view of the majority that the matter should be remitted to
the Supreme Court
of Victoria.
McHUGH J I agree with the reasons for judgment of Mason CJ
FOOTNOTES
1 GFC Sales Agreement, cl.12.8; SEC Sales Agreement, cl.19.5.
2 (1994) 1 VR 1.
3 Bremer Vulkan v. South India Shipping (1981) AC 909 at 984; London Export
Corporation Ltd. v. Jubilee Coffee Roasting Co. Ltd.
(1958) 1 WLR 271 at
278-280; Haddad v. Norman Mir Pty. Ltd. (1967) 2 NSWR 676 at 683; American
Jurisprudence, 2nd ed. (1962), vol.5
at par.30.
4 Domke on Commercial Arbitration, rev. ed. (1990) at para 24.01.
5 Domke on Commercial Arbitration (Prac. Guide) at para 4.01, 4.06.
6 Oxford Shipping Co. v. Nippon Yusen Kaisha (1984) 3 All ER 835 at 842;
Bibby Bulk Carriers v. Cansulex Ltd. (1989) QB 155 at
166-167.
7 Russell on the Law of Arbitration, 20th ed. (1982) at 260; Mustill and
Boyd, The Law and Practice of Commercial Arbitration in
England, 2nd ed.
(1989) at 303-304.
8 (1993) 2 Lloyd's Rep 243 at 246-247.
9 Jacobs, Commercial Arbitration Law and Practice at par.1.383.
10 Bernstein, Handbook of Arbitration Practice (1987) at par.13.6.3.
11 (1990) 1 WLR 1205.
12 ibid. at 1213.
13 ibid.
14 ibid. at 1214.
15 Scott v. Scott (1913) AC 417 at 453 (where Lord Atkinson said of an in
camera order that it means no more than that the hearing
will be in private);
see also John Fairfax and Sons v. Police Tribunal (1986) 5 NSWLR 465 at 481
(where McHugh JA drew a distinction
between a power to exclude strangers from
proceedings and a power to prohibit publication).
16 Industrotech Constructors Inc. v. Duke University (1984) 314 SE 2d 272 at
274; Giacobazzi Grandi Vini S.p.A. v. Renfield Corp.
(1987) US Dist Lexis
1783; USA v. Panhandle Eastern Corp. (1988) 118 FRD 346.
17 Alliance v. Australian Gas Light Co. (1983) 34 SASR 215 at 229-232.
18 Commercial Arbitration Act, s.33.
19 s.38.
20 s.39.
21 s.44.
22 s.47.
23 (1977) AC 239.
24 ibid. at 254-256.
25 ibid. at 254.
26 [1988] HCA 15; (1988) 164 CLR 539 at 572.
27 Liverpool City Council v. Irwin (1977) AC at 254.
28 (1993) 2 Lloyd's Rep at 246.
29 (1924) 1 KB 461 at 473 per Bankes LJ, 481 per Scrutton LJ, 486 per Atkin
LJ.
30 (1993) 2 Lloyd's Rep at 249.
31 A-G v. Jonathan Cape Ltd. (1976) QB 752; The Commonwealth of Australia v.
John Fairfax and Sons Ltd. [1980] HCA 44; (1980)
147 CLR 39; A-G
(U.K.) v. Heinemann
Publishers Australia Pty. Ltd. (1987) 10 NSWLR 86; A-G v. Guardian Newspapers
(No.2) [1988] UKHL
6; (1990) 1 AC 109.
32 (1980) 147 CLR at 51.
33 ibid. at 52.
34 (1981) AC 1096.
35 ibid. at 1168-1169. Lord Salmon, in a strong dissent, highlighted the
sharp distinction between a statutory authority and a
private company: "there
are no shareholders, and (the authority's) losses are borne by the public
which does not have anything like
the same safeguards as shareholders" (at
1185). His Lordship concluded that the public was "morally entitled" to know
why the statutory
authority was in such a parlous condition.
36 Finn, "Confidentiality and the 'Public Interest'", (1984) 58 Australian
Law Journal 497 at 505.
37 Alterskye v. Scott (1948) 1 All ER 469 at 471; Distillers Co. v. Times
Newspapers (1975) QB 613 at 618-620 per Talbot J; Riddick
v. Thames Board
Mills (1977) QB 881 at 895-896 per Lord Denning M.R.; Home Office v. Harman
(1983) 1 AC 280.
38 1st ed. (1885) at 238.
39 Hassneh Insurance (1993) 2 Lloyd's Rep at 247 per Colman J.
40 Codelfa Construction Pty. Ltd. v. State Rail Authority of N.S.W. [1982] HCA 24; (1982)
149 CLR 337 at 347, 404.
41 Luxor (Eastbourne), Ld. v. Cooper (1941) AC 108 at 137.
42 The Moorcock (1889) 14 PD 64 at 70.
43 Codelfa Construction Pty. Ltd. v. State Rail Authority of N.S.W. (1982)
149 CLR at 352-353.
44 Con-Stan Industries of Australia Pty. Ltd. v. Norwich Winterthur
Insurance (Australia) Ltd. [1986] HCA 14; (1986) 160 CLR 226
at 241; Reigate
v. Union
Manufacturing Co. (Ramsbottom) (1918) 1 KB 592 at 605; In re Anglo-Russian
Merchant Traders and John Batt
and Co. (London)
(1917) 2 KB 679 at 685-686.
45 See Kursell v. Timber Operators and Contractors, Ld. (1923) 2 KB 202 at
206.
46 cf. Home Office v. Harman (1983) 1 AC 280 at 308, 312.
47 Parry-Jones v. Law Society (1969) 1 Ch 1 at 9, cited in A v. B Bank
(1993) QB 311 at 322-323.
48 (1924) 1 KB 461 at 473.
49 ibid. at 481.
50 ibid. at 486.
51 (1993) 2 Lloyd's Rep 243 at 248-249.
52 ibid. at 249.
53 Alterskye v. Scott (1948) 1 All ER 469 at 470; see Central Queensland
Cement Pty. Ltd. v. Hardy (1989) 2 Qd R 509 at 510.
54 (1983) 1 AC at 302.
55 Crest Homes Plc. v. Marks (1987) AC 829 at 854.
56 ibid. at 860; EMI Records Ltd. v. Spillane (1986) 1 WLR 967 at 977;
(1986) 2 All ER 1016 at 1023-1024.
57 Holpitt v. Varimu (1991) 103 ALR 684 at 686-687.
58 Springfield v. Bridgelands (1992) 110 ALR 685 at 693; see also at
691-692; Holpitt v. Varimu (1991) 103 ALR at 686-687; Complete
Technology v.
Toshiba (1994) 124 ALR 493 at 501-502.
59 cl.4(2) of "Business and Rules" in the Sixth Schedule. The SEC Act has
now been extensively amended by, inter alia, the Electricity
Industry Act 1993
(Vic.). I assume the relevant provisions are those in force prior to the
amendment.
60 See the Gas and Fuel Corporation Act 1958 (Vic.) ("GFC Act"), s.7; SEC
Act, s.4.
61 GFC Act, s.22 and Schedule to Sched.2; SEC Act, s.12A.
62 See SEC Act, s.9E(2)(b), (3).
63 Arts 66, 67, 69 of the articles of association of GFC: Sched.2 to GFC
Act; SEC Act, ss.4(3), 6, 8(2), (3), 9(2).
64 GFC Act, s.23(a).
65 ibid., s.21(2).
66 ibid., s.101(1).
67 SEC Act, s.9D(2).
68 ibid., s.9D(3).
69 ibid., s.12(2)(a).
70 ibid., s.9E.
71 20th ed. (1982) at 260.
72 Bernstein and Wood, Handbook of Arbitration Practice, 2nd ed. (1993) at
144-145.
73 Esso Aust. v. Plowman (1994) 1 VR 1 at 9.
74 See Tillam v. Copp (1847) 5 CB 211 (136 ER 857); Haigh v. Haigh (1861) 3
De GF and J 157 (45 ER 838); Traynor v. Panan Constructions
Pty. Limited
(1988) 7 Aust Construction LR 47 (N.S.W. Sup. Ct).
75 (1984) 3 All ER 835.
76 ibid. at 842.
77 (1989) QB 155 at 166-167.
78 (1992) 28 NSWLR 321. The New South Wales Court of Appeal dismissed an
application for leave to appeal. In the High Court Gaudron
J declined to
grant a stay pending an application for special leave to appeal: Elspan
International Ltd. v. Aerospatiale Holdings
Ltd. (1992) 67 ALJR 177. The
application for special leave to appeal was discontinued on 6 April 1993.
79 See the discussion at (1992) 28 NSWLR at 327.
80 ibid. at 326.
81 Commercial Arbitration Law and Practice at par.1.383.
82 Esso Aust. v. Plowman (1994) 1 VR at 13.
83 ibid. at 12.
84 See Hassneh Insurance v. Mew (1993) 2 Lloyd's Rep 243 at 246.
85 See Esso Aust. v. Plowman (1994) 1 VR at 12-13 per Brooking J.
86 Liverpool C.C. v. Irwin [1976] UKHL 1; (1977) AC 239 at 254 per Lord Wilberforce. See
also Lister v. Romford Ice and Cold Storage
Co. Ltd. [1956] UKHL 6;
(1957) AC 555 at 576-577.
As to implying a term to give business efficacy to a contract, see Codelfa
Construction
Pty. Ltd. v. State
Rail Authority of N.S.W. [1982] HCA 24; (1982) 149 CLR 337.
87 See Bernstein and Wood, op. cit. at 145.
88 (1990) 1 WLR 1205.
89 For example, Crimes Act 1900 (N.S.W.), s.578; Evidence Act 1910 (Tas.),
s.103A.
90 For example, Evidence Act 1929 (S.A.), ss.69 and 69a; Evidence Act 1971
(A.C.T.), s.83(2); Evidence Act (N.T.), s.57(1).
91 Reg. v. Socialist Worker Printers and Publishers Ltd.; Ex parte
Attorney-General (1975) QB 637 at 652 per Lord Widgery CJ; Taylor
v.
Attorney-General (1975) 2 NZLR 675; Ex parte The Queensland Law Society
Incorporated (1984) 1 Qd R 166 at 170 per McPherson J.
92 John Fairfax and Sons v. Police Tribunal (1986) 5 NSWLR 465 at 481 per
McHugh JA
93 ibid.
94 Attorney-General v. Leveller Magazine (1979) AC 440 at 452 per Lord
Diplock, 465 per Lord Edmund-Davies.
95 ibid. at 452-453, 456, 469.
96 (1983) 34 SASR 215 at 231.
97 Esso Aust. v. Plowman (1994) 1 VR at 14, 32.
98 The lack of attention given to confidentiality in commercial arbitrations
is in contrast to the significant attention given
to the subject in mediation,
the latter being "a topic of much interest and debate among the dispute
resolution community": New
South Wales Law Reform Commission, Training and
Accreditation of Mediators, Report No.67, (1991) at par.5.32. Also see
Attorney-General's
Department (Victoria), Attorney-General's Working Party on
Alternative Dispute Resolution: Report (1990) at pars 5.18-5.20; and
Attorney-General's
Department (Commonwealth), Dispute Resolution in Commercial
Matters: Papers, (Canberra), 6 June 1986 at 11-13.
99 Esso Aust. v. Plowman (1994) 1 VR at 15-16.
100 Clause 4(2) has now been repealed. See Electricity Industry Act 1993
(Vict.), s.113.
101 ibid. at 31.
102 ibid. at 32.
103 (1993) 2 Lloyd's Rep at 250.
104 cf. Dolling-Baker v. Merrett (1990) 1 WLR at 1213 where Parker LJ said
that the obligation of confidentiality arises "out of
the nature of
arbitration itself".
105 (1993) 2 Lloyd's Rep at 247.
106 Distillers Co. (Biochemicals) Ltd. v. Times Newspapers Ltd. (1975) QB
613 at 618-620; Riddick v. Thames Board Mills (1977)
QB 881 at
895-896; Home Office v. Harman (1983) 1 AC 280.
107 (1993) 2 Lloyd's Rep at 247.
108 Commercial Arbitration Act 1984 (Vict.), s.33.
109 (1993) 2 Lloyd's Rep at 247.
110 Bremer Oeltransport G.m.b.H. v. Drewry (1933) 1 KB 753.
111 (1993) 2 Lloyd's Rep at 247.
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