---

Peter Megens  
Partner
T +61 3 9643 4253

---

Sydney
Max Bonnell  
Peter Pether  

Melbourne
Joanne Cameron  

Brisbane
Justin McDonnell  
John Swinson  

Canberra
Ian Johnson  

Hong Kong
David Bateson  (炳辰)
Paul Starr  (保羅仕達)

---

This English Court of Appeal decision considers the rare circumstances in which a court may intervene in arbitral proceedings to order the disclosure of documents used in the arbitration.

Background

The appellant company, Michael Wilson & Partners Ltd was established to provide legal services to Kazakhstan. The respondent, Mr Emmott, joined the company as a director and senior lawyer in 2001 under an agreement which contained an arbitration clause providing for arbitration in England under English law. In June 2006, Mr Emmott left Michael Wilson & Partners Ltd to set up a business with two former employees of the company.

Following Mr Emmott’s departure from the company, the appellant commenced arbitration proceedings in London claiming breach of contract and breach of trust. The appellant simultaneously brought court proceedings in England, New South Wales, the British Virgin Islands, Jersey and Colorado.

The appellant, Michael Wilson & Partners Ltd, originally made allegations of fraud against Mr Emmott in the arbitration proceeding, however these allegations were subsequently withdrawn by the appellant.

In October 2006, Michael Wilson & Partners Ltd commenced proceedings in New South Wales against Mr Emmott’s colleagues which included allegations of fraud and conspiracy against Mr Emmott. In December 2006, Michael Wilson & Partners Ltd also commenced related proceedings in the British Virgin Islands.

Application for disclosure of documents

Mr Emmott was concerned that allegations of fraud and conspiracy had been brought against him in New South Wales and the British Virgin Islands despite these claims having been withdrawn from the London arbitration proceedings. As a result of these circumstances, Mr Emmott made an application to the English courts to allow the disclosure of documents from the London arbitration in the foreign proceedings. This application was made on the basis that the allegations made by Michael Wilson & Partners Ltd in the foreign proceedings were materially inconsistent with the London arbitration and as such, Michael Wilson & Partners Ltd were presenting the foreign courts with a misleading or inaccurate picture. Mr Emmott claimed that disclosure of the documents was in the interests of justice and would cause the appellant no prejudice.

Decision

The Court of Appeal upheld the trial judge’s decision and ordered disclosure of the documents on the basis that it was against the interests of justice for foreign courts to be misled or potentially misled.

The Court of Appeal acknowledged that there was an obligation, implied by law, on both parties not to disclose for any other purpose any documents prepared for and used in arbitration. Despite this well-settled rule, the court recognised four circumstances in which disclosure may be permissible and must be determined on a case-by-case basis:

• where there is consent
• where there is an order or leave of the court
• where it is reasonably necessary for the protection of the legitimate interests of an arbitrating party, and
• where the interests of justice and (perhaps) the public interest require disclosure.

The Court of Appeal concluded that the interests of justice required the English court, so far as possible, to ensure that the parties to the London arbitration should not seek to use the cloak of confidentiality with a view to misleading foreign courts, particularly where the foreign cases raised the same or similar allegations and were proceeding in parallel with the arbitral proceedings.

In assessing whether the court had jurisdiction to intervene in the arbitral process to determine the question of confidentiality, the Court of Appeal noted that because the confidentiality rule has developed as an implied term of the arbitration agreement, any dispute as to its scope would usually be determined by the arbitral tribunal. However, in the present case, the appellant did not seek a stay of the proceedings on the grounds that it was a matter for the arbitral tribunal, and as such, the court had jurisdiction to make the order. As a result, the court concluded that the trial judge had jurisdiction to determine the question of confidentiality and was right to authorise the disclosure of the documents. The court stated that the content of the obligation to disclose documents used in arbitration proceedings depends on the context in which the obligation arises and on the nature of the information or documents at issue.

Conclusion

Decisions relating to the ambit of the parties obligations under an arbitration agreement, including issues of confidentiality, will ordinarily be determined by the arbitral tribunal in accordance with the arbitration clause. In circumstances where a court is asked to intervene to order the disclosure of documents used in arbitral proceedings, it may do so only in four very limited circumstances.