CYIL 2012

CROSSING THE RUBICON: ON THE CORRELATION OF THE PRINCIPLE OF TRANSPARENCY… institution that is involved, and even, subject to review by the courts, third parties and it is also a prerogative inherent in their judicial function, as is the case with the rule that all deliberations between the arbitrators must remain confidential. 4 Confidentiality is advantageous for a variety of reasons- parties to the arbitration may not wish to expose certain allegations to the public, e.g. allegations of bad faith, misrepresentation, incompetence, lack of adequate financial resources, etc. 5 T he second dimension, bearing the idea of not being bound by the duty to publicize a loss, in order to avoid recurrence of losses in analogous pending proceedings, is especially appealing to parties retaining insightful information. However, it would not be difficult to overstate the limitations of this seemingly trouble-free principle, since confidentiality is distant from a settled issue in the arbitral sphere. Notwithstanding the premise that confidentiality has as its starting point the contractual nature of international arbitration, a considerable amount of authors are focusing on the fact that confidentiality of international arbitration proceedings and awards is one area with a crying need for a corrective hand and far from a settled issue. 6 By the same token case law, arbitral rules and even the opinions of legal scholars and practitioners are diverging when discussing the duty of confidentiality, its legal base, extent, the moment of its cessation and its existence in the environment of public interest, which can arise in international investment arbitrations. Through the impetus of privacy, complications imposed by the abovementioned inconsistency are paramount. Pressing issues emerge especially when considering the expectancy of the extent of confidentiality which can be obtained by the parties in the course of the proceedings, Continuing uncertainty in this area, as some authors conclude, can breed only distrust of the arbitral process and the significant obstacles to solving this problem will not be easy to surmount. 7 The hypothesis of the present article is based on the assumption that confidentiality in international investment arbitration correlates with the principle of transparency. This state of a mutual correlation is strengthened by the fact that in investment related disputes, the legal nature of a state entity is being governed by a set of general principles- among which can be found also the principle of transparency. In order to assess the current status quo, one has to observe not only the various case law on the topic of confidentiality, but also the practice of states in the area of transparency. 4 Fouchard Gaillard Goldman On International Commercial Arbitration Kluwer Law International Ed. E. Gaillard, J. Savage. 1999, pp. 627. For the perspective of Czech scholars on the topic of confidentiality in arbitral proceedings see e.g. V. Balaš, „Důvěrnost arbitrážního řízení? Ano, ale!“ 6 (1) Právní forum (2004), pp. 223-227. 5 A. Redfern, M. Hunter, Law and Practice of International Commercial Arbitration (3d ed., 1999) as cited in: C. G. Buys, “The tensions between confidentiality and transparency in international arbitration”, 14 The American Review of International Arbitration) , pp. 123. 6 J. W. Sarles, “Solving the Arbitral Confidentiality Conundrum in International Arbitration”, available at: ; last visit: 19 April 2012, pp. 1. 7 Ibid , pp. 2.

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