The Needs of the Many: Confidentiality versus Transparency in Arbitration

One of the major “selling points” of arbitration as an alternative to litigation has always been the confidentiality of the process: Whereas litigation becomes part of the public record, arbitration and other forms of alternative dispute resolution are considered expressions of autonomy: Both parties agree voluntarily to handle their disputes in a certain way.  As a result, privacy is often assumed as arbitration is a private negotiation.

However, the courts have been less than strong in their support of this assumption, and in general, it’s recommended that if you wish arbitration proceedings to be kept confidential, you must include specific privacy language in the arbitration agreement itself.  Lacking such language, privacy becomes a voluntary decision on both sides.

The Need for Transparency

Complicating matters, then, are the rights or needs of third parties to have access to arbitration information that would seem to violate the privacy of the proceedings.  Again, if no specific privacy language is included in the arbitration’s governing agreement, there may be no way to prevent outside parties from discovering the events and even making them public.  But even if privacy is part of the agreement, the courts have often found there to be a need for “transparency” in arbitrations, especially arbitrations involving public utilities or issues that could conceivably affect the community at large.

Transparency is Not the Opposite of Privacy

Transparency thus makes many people involved in arbitration proceedings nervous.  However, the issue of transparency does not automatically mean the instant and unfiltered revelation of all details.  The courts have steadily upheld the idea that transparency can only be imposed when circumstances justify it, and then must be controlled by carefully constructed filtering that keeps data unnecessary to the process of transparency obscured.

In situations where transparency is imposed, the privacy language of the arbitration agreement can be helpful if it has been crafted carefully to anticipate the possibility, as it can define broad categories of personal information that might be revealed during the arbitration but which would be inappropriate for a transparency action.

As with many legal term and actions, “transparency” is not a monolithic concept that is applied in broad and clumsy strokes, exposing the parties to damaging and destructive revelations without recourse or control.  Transparency and privacy can in fact co-exist if the concepts are considered from the outset, when the arbitration agreement is drafted.