City of Moscow v. Bankers Trust

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The Department of Economic Policy and Development of the City of Moscow and another v Bankers Trust Company and International Industrial Bank
English Court of Appeal: Sir Andrew Morritt VC, Mance and Carnwath LJJ.: 25 March 2004
Graham Dunning QC and Paul Key, instructed by Hogan & Hartson, for the appellants, City of Moscow
Michael Bloch QC, instructed by Clifford Chance, for the first respondents, Bankers Trust
Michael Sullivan, instructed by Watson, Farley & Williams, for the second respondents, International Industrial Bank
Arbitrations in England are private and confidential. But when an arbitrator's decision is challenged in court, is the court's decision to be treated as confidential as well? The issue here was whether a judgment dismissing an application challenging an arbitration award should be published. The Court of Appeal held that, in this case, the judgment should remain private but that, generally, public interest required judgments to be public.

DMC Category Rating: Developed

This case note is based on an Article in the April 2004 Edition of the ‘Bulletin’, published by the Marine and Insurance teams at the international firm of lawyers, DLA. DLA is an International Contributor to this website

The dispute between the parties involved very sensitive and confidential issues. The arbitration was governed by UNICTRAL Rules, which provide that hearings should be held "in camera unless the parties agree otherwise" and that awards "may be made public only with the consent of both parties". The hearing took place in private and the award given in May 2002 was published only to the parties.

Bankers Trust appealed the award under section 68 of the Arbitration Act 1996 on the grounds of serious irregularity. At a hearing held in private the court dismissed the application. Its judgment, dated 21 March 2003, briefly appeared on the Lawtel website and in their daily update, available only to Lawtel subscribers. Banker's Trust objected and the material was removed.

There then followed a further hearing before the same judge to decide on the question of publication. He found that, whilst Bankers Trust had provided little evidence of actual detriment should the judgment be published, the Department of Economic Policy and Development of the City of Moscow ("Moscow") had provided no good reason for requiring publication. In such circumstances, the confidentiality of the arbitration was the dominant factor in determining that the judgment of 21 March 2003 should remain private and neither it nor the Lawtel summary should be made available for any publication. Moscow appealed.

There was no dispute that Moscow could publish the end result of the arbitration and the end result of the litigation. Moscow, however, wanted to be able to publish the substance of the decision, or failing that, the Lawtel summary, to show the international financial market generally that the arbitrator had found that it had not committed any sort of financial default and that the decision had been upheld by the court.

Privacy and the courts
The common law position on privacy and secrecy of hearings and judgments goes back to Scott v Scott [1913] AC 417. The fundamental rule is that the court must, as between parties, administer justice in public. Exceptions to the rule must reflect the "yet more fundamental principle that the chief object of the Courts of Justice must be to secure that justice is done".

This is reflected in Part 39 of the Civil Procedure Rules, which states that court hearings should be in public but provides for circumstances in which hearings may be "private", such as where publicity would defeat the object of the hearing, where the case involves matters of national security or confidential information, or to protect the interests of any child or patient. In addition, a hearing may be held in private if the judge considers this to be necessary in the interests of justice. Similarly, a judgment is normally a public document but the judge has the power to prohibit the publication of information relating to the proceedings in certain circumstances. The right to a fair and public hearing and for judgment to be pronounced publicly under Article 6 of the European Convention on Human Rights is subject to similar provisos.

Privacy and arbitration
The starting point for arbitration is, however, different. The parties' autonomy - their right to agree how their dispute should be resolved - is a fundamental principle, subject only to such safeguards as are necessary in the public interest. Implicit in the choice to arbitrate in England is the fact that the arbitration will be private and confidential.

This is reflected in CPR 62.10, which governs applications to the court concerning arbitration claims and takes a more restrictive approach to publicity. The rule, which came into force in March 2002, provides that the court may order that an arbitration application can be heard in public or in private, but, subject to that, all arbitration claims will be heard in private, other than applications concerning a preliminary point of law or appeals under section 69 of the Arbitration Act on questions of law arising from the award.

In the Court of Appeal's view, this rule was only a starting point. The fact that the parties have chosen to arbitrate privately cannot dictate the position in respect of arbitration claims brought to court. By that point, the court is exercising its supervisory role and may consider that the public interest in a public hearing outweighs the parties' desire for continuing privacy and confidentiality.

There is also a distinction to be drawn between the hearing of a case and publication of the resulting judgment. The range of arbitration claims is so wide that there could be no blanket ban on the publication of reasoned judgments because of a generalised concern that publication might deter some prospective parties from using the arbitration process. Whilst some parties may have specifically chosen arbitration for its confidentiality, others may have been more influenced by the expertise of the arbitrators or the informality of the proceedings. Many arbitrations are about facts and circumstances that are unlikely to involve any significant confidential information at all.

Even if the hearing itself was in private, public interest requires that the judgment should be given in public where this can be done without disclosing significant confidential information. A reasoned judgment on an application under section 68 of the Arbitration Act would normally disclose only a limited amount of the subject matter and could usually avoid unnecessary disclosure of sensitive material.

In this particular case, the Court of Appeal agreed with the judge that the dispute involved very sensitive and confidential issues and that, in the circumstances, the judgment should remain private. But it laid greater emphasis than the judge on the importance of factors militating in favour of giving a public judgment on arbitration claims brought before the court. As for the Lawtel summary, this was a brief and factually neutral summary that had not disclosed any sensitive material. Consequently, there was no basis for preventing Moscow from disseminating it for any purpose.


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