Key takeaways
Confidentiality has limits in arbitration cases
Not all learned information is legally protected.
Court weighs risk before granting injunctions
Solicitors rarely barred unless real prejudice is shown.
Exceptions to confidentiality may apply
Demonstrating repeated behaviour may justify partial disclosure.
A Corporation -v- B Firm & another [2025] EWHC 1092 (Comm)
In an anonymised decision, the Court has usefully considered the principles applicable to whether injunctive relief should be granted against solicitors who allegedly breached the duty of arbitral confidentiality by passing on confidential information obtained in one arbitration reference for use in another arbitration reference.
In doing so, it highlighted the importance of distinguishing between information protected by the obligation of arbitral confidentiality, and the experience which lawyers inevitably acquire from conducting arbitrations.
This practical decision is likely to be of interest to arbitration practitioners handling issues of arbitral confidentiality where facts, issues and claims may arise in contractual chains being handled across different jurisdictions.
The Court did not think any injunctive relief was justified in this case. As it highlighted, not everything a lawyer learns from acting in an arbitration is “off limits” for subsequent application because of the obligation of arbitral confidentiality. The Court further added that is not an easy line to articulate, but experienced lawyers generally have a good sense of which side of it they are.
The parties
The Vessel 1 Reference was an arbitration involving Vessel 1 between A Corporation and B Corporation.
The Vessel 2 Reference was an arbitration involving Vessel 2 between C Corporation and D Corporation.
A and D Corporations were companies in the same ultimate ownership.
Mr W and Mrs X were partner and fee-earner respectively at Firm B’s London office and acted for B Corporation in the Vessel 1 Reference. Firm B’s Asia office acted for C Corporation in the Vessel 2 Reference.
Firm A’s London office acted in the Vessel 1 Reference (for A Corporation) and in the Vessel 2 Reference (for D Corporation).
By the time of the hearing, the Vessel 1 Reference had concluded, but the Vessel 2 Reference was continuing.
The underlying disputes
The underlying disputes arose out of various memoranda of agreement (MOAs) for the sale and purchase of vessels, as well as a cooperation agreement. There was also a settlement agreement between A and B Corporations. The nature of the disputes was unclear.
The relief sought
A Corporation applied for various forms of interim injunctive relief. However, the principal injunction sought was to prevent Firm B and any of its branches from acting for C Corporation in the Vessel 2 Reference.
The confidentiality obligations
Although A Corporation referred to a number of express confidentiality provisions in the various contracts, it ultimately relied on the implied obligation of confidentiality in relation to arbitrations arising under English law.
In setting out the extent and scope of the implied obligation of arbitral confidentiality, the Court highlighted among other things that the fact that a commercial dispute leads to the commencement of an arbitration does not of itself mean that the existence of the dispute and the events which gave rise to it are confidential. For example, if a shipowner delivers a charterer’s cargo in defective condition, the fact of the contract, its performance or the charterer’s complaint are not confidential simply because an arbitration is thereafter commenced in respect of the charterer’s claim.
Once the information is deployed in the arbitration e.g. in the pleadings, it benefits from arbitral confidentiality due to the private nature of the arbitral process. However, there is a sliding scale of arbitral confidentiality and not all material to which arbitral confidentiality attaches will necessarily justify the same level of protection from the courts.
The Court also noted that there are established exceptions to the obligation of arbitral confidentiality, including that it is allowed to use at least some of the material falling within the scope of arbitral confidentiality in order to obtain similar fact evidence from a third party who is believed to have similar complaints against the opposing party. This is a recognised category of admissible evidence in civil proceedings.
The Commercial Court decision
Alleged misuse of confidential information
A Corporation made various allegations that the Defendant had misused material which was subject to arbitral confidentiality. The Court was not persuaded that A Corporation had an arguable complaint with regard to the majority of its allegations against the Defendants. However, some allegations required further consideration.
In addition, it was conceded by the Defendants (Firm B and Mr W) that they breached obligations of confidentiality in passing on details of two settlement offers made by A Corporation in the Vessel 1 Reference to Firm B’s Asia office.
The application for injunctive relief
The Court referred to authorities that stressed the importance of permitting litigants to instruct the lawyer of their choice and that it would be rare for a solicitor to be prevented from acting for a different claimant against the same defendant in respect of a similar claim as a result of confidential information obtained about the defendant in the earlier proceedings.
It was also relevant to consider the impact of an injunction on the current client (in this case, C Corporation). The Court had to consider the likelihood of confidential information passing to the new client, weighed against the prejudice to the new client if the injunction was granted. The burden of proof remained on the applicant to show that there was a real risk of prejudice to it from the other party’s solicitor having had access to confidential or privileged information.
Ultimately, the Court had to conduct a balancing exercise, taking account of the prejudice to the opposing party if such an injunction were to be granted and of whether some less onerous form of injunctive relief, such as an injunction to restrain the use of the privileged, confidential information, would protect the applicant sufficiently.
Discussion
The information regarding the settlement offers had already been communicated and an injunction would not prevent that. A Corporation had settled with B Corporation so no prejudice could arise from communication of that information. Assuming that prejudice to D Corporation as a company in the same ultimate ownership as A Corporation was relevant, the significance of the information provided was very limited, and so was any prejudice to D Corporation.
Specifically, the first offer made was of limited relevance and no other figures crossed the line. The quantum claimed in the two References was significantly different and driven by facts particular to each vessel (its physical condition, what repairs were done, trading opportunities lost etc). D Corporation would, in any confidential discussions with C Corporation, know a great deal more than C Corporation about the settlement history of the Vessel 1 Reference – the amount of each offer and counteroffer, and the amount and terms of the final settlement. This further minimised any prejudice to D Corporation.
As to other alleged breaches, the Defendants had the better of the argument that there had been no breach, through a combination of the fact that the factual allegations as to Vessel 1’s condition on delivery and the information provided to B Corporation prior to entering into the MOA were not subject to the obligation of arbitral confidentiality and because it was strongly arguable that the sharing of information for the purpose of establishing similar events and complaints relating to both vessels fell within an exception to arbitral confidentiality. Furthermore, the legal team instructed for D Corporation in the Vessel 2 Reference would know a great deal more about the events in the Vessel 1 Reference, being essentially the same team who acted in that reference.
Additionally, C Corporation would already be aware of the alleged similarities in the sales so far as they concerned certain features of the vessels’ condition and the information provided pre-sale. Mr W’s evidence was that C Corporation already had some awareness of issues surrounding Vessel 1 as a result of “market chatter” even before C Corporation approached Firm B’s Asia office.
Findings
The Court concluded that there was no realistic possibility of any further information relating to the Vessel 1 Reference reaching C Corporation or its solicitors.
Specifically:
Mr W and Ms X had agreed to stand down from the Vessel 2 Reference, as had any other personnel who worked on the Vessel 1 Reference who were involved in the conduct of litigation.
Mr W and Ms X had reviewed the Vessel 2 file and deleted all emails between Firm B’s London office and Firm B’s Asia office and from Firm B’s Asia office and C Corporation relating to communications concerning B Corporation’s claim and had confirmed that there were no attendance notes or other documents recording exchanges on these matters. The Vessel 2 file had been cleansed of confidential information. Mr W and Ms X were now willing to be locked out of the Vessel 2 file.
The Vessel 1 Reference counsel team had agreed not to act in the Vessel 2 Reference.
On that basis, the Court thought there was no real risk that confidential information would cross from Firm B’s London office to its Asia office. No injunction was, therefore, necessary against the London office.
As to Firm B’s Asia office, the Court decided there was no real possibility that they already had access to confidential information deriving from the Vessel 1 Reference which did not arguably fall within an exception to the confidentiality obligation, and which had not already been passed on to C Corporation. An injunction was not, therefore, justified against them either.
Comment
The decision is a useful reminder of the legal principle that solicitors who are instructed by parties to an arbitration owe a similar obligation of confidentiality to both parties, and that such a solicitor may be restrained, in an appropriate case, from deploying material which is subject to arbitral confidentiality for a non-permitted purpose.
It is important to ensure that parties (and their lawyers) to an arbitration are clear as to the scope and extent of the obligations of arbitral confidentiality, and where there are express confidentiality provisions in the underlying contracts, these should also be carefully considered.