We recently posted on the peril to the intended confidentiality accorded the arbitration of international disputes by the necessity of having to file in open court arbitral awards in order to enforce or challenge them. The issue can be addressed in a number of ways, two of which we suggested being:
Enlisting the judicial system — for example, seeking a protective order at the commencement of the case to maintain the awards, or at least parts of the awards, as confidential; or
Anticipating this problem at the time the corporate lawyers are putting together the transaction documents.
To us it seems that this problem is being exacerbated by the increase in the number of sources of news and information coupled with the ease of mass distribution enabled by the Internet, especially when more and more courts are going “on-line” and permitting or even insisting on e-filing of papers in cases. This makes the need for a workable solution that much more timely and, indeed, urgent.
Our recent postings have identified several ostensibly confidential arbitrations and awards that were made public by reason of the enforcement/challenge process. Two more of interest are:
The final award in the matter relating to Barracuda & Caratinga Leasing Co., Petrobras, and Kellogg Brown & Root. The arbitration was conducted under the UNCITRAL rules, with the umpire appointed by the International Chamber of Commerce. For international litigation practice, the noteworthy discussion comes towards the end of the 101 page award. The Panel follows New York law and determines, first, that the award is to be calculated in Brazilian currency, not U.S. currency, and that pursuant to New York Judiciary Rule it is to be converted into U.S. dollars as of the day of the judgment, not the day of the breach or accrual. The Panel also interestingly finds that it didn’t have the authority under New York law or the UNCITRAL Rules (or the parties’ contract) to award pre-award interest on legal and arbitration costs.
The final award in the matter relating to Ruby/Archstone. The award does not state under what rules it was conducted (the public award is not the first in the case; that information may have been set forth in earlier awards). Nor does the award state how the panel was composed. The award does spend many pages on a recitation of Maryland law and on the Panel’s application of the facts to that law. None of the six signatories to the award (which included the three panel members and tax advisors) appears to be a lawyer or judge.