Confidentiality in U.S. Arbitration

Parties often agree to resolve their disputes in arbitration so that they can keep the proceedings confidential. Whether the parties and arbitrators must keep arbitration proceedings confidential depends on:

• The institutional arbitration rules that the parties agree to use.
• The applicable state’s arbitration laws.
• A confidentiality provision in the parties’ arbitration agreement.

This article describes the considerations for keeping U.S. arbitration proceedings confidential, including available options for arbitral parties who want a confidential arbitration. This article also explains the applicability and limitations of agreements, laws, and institutional rules on keeping arbitration proceedings confidential, along with the effects on confidentiality when a party seeks court intervention, such as to confirm or vacate an arbitration award.

Reasons That Parties Want Confidentiality

Parties often choose to arbitrate a dispute to avoid the public dissemination of information about their dispute. For example:

• Sellers may want to avoid public disclosure of problems with their products (see Delta Funding Corp. v. Harris, 396 F. Supp. 2d 512, 524-25 (D. N.J. 2004) (noting the “potential deleterious effects of confidentiality provisions that tend to enshroud improper business practices behind a veil of consumer ignorance”)).
• Employers may want to keep internal company policies and information secret (see CarMax Auto Superstores Cal. LLC v. Hernandez, 94 F. Supp. 3d 1078, 1121-22 (C.D. Cal. 2016)).
• High-profile individuals may want to avoid unflattering publicity (see Coady v. Harpo, Inc., 719 N.E.2d 244, 246 (Ill. App. Ct. 1999) (affirming dismissal of lawsuit challenging enforceability of confidentiality and arbitration agreement)).

Arbitration provides a private forum for parties to resolve a dispute. Unlike U.S. court litigation, which takes place in a public courtroom and involves publicly filed documents accessible to anyone, an arbitration usually involves nonpublic:

• Document exchanges.
• Paper filings.
• Hearings in a private space (for example, a private conference room).

Although arbitration is private, it is not automatically confidential. Parties to an arbitration generally may publicize the proceedings and certain information learned during the arbitration unless institutional arbitration rules, applicable state law, or the parties’ agreement require the parties to keep the arbitration proceedings confidential (see How to Ensure Arbitration Proceedings Remain Confidential, below).

Absent a confidentiality obligation, a party may:

• Publicize or disseminate:
  • the arbitration filings, including the demand for arbitration and other pleadings and motions;
  • documents annexed to any arbitration filings, such as the parties’ contract containing the arbitration clause;
  • documents a party receives in discovery; or
  • the award.
• Disclose information about the proceedings to third parties or the press.

How to Ensure Arbitration Proceedings Remain Confidential

To ensure the confidentiality of arbitration proceedings, parties should enter into an arbitration agreement that:

• Calls for the application of institutional arbitration rules that require confidentiality (see Confidentiality Under Institutional Arbitration Rules, below).
• For the governing law of the contract, provide the law of a state that has arbitration laws requiring confidentiality (see Confidentiality Under Arbitration Statutes, below).
• Contains a valid broad confidentiality provision (see Confidentiality Required by an Arbitration Agreement, below).

Confidentiality Under Institutional Arbitration Rules

Domestic U.S. Institutional Rules

The rules of several U.S. arbitral institutions address confidentiality to varying degrees. For example:

• Under Rule 20 of the International Institute for Conflict Prevention and Resolution (CPR) Administered Arbitration Rule, effective March 1, 2019, the parties, arbitrators, and CPR must keep the arbitration proceedings confidential.
• Under Rule 26(a) of the JAMS Comprehensive Arbitration Rules and Procedures, effective June 1, 2021, the arbitrators and JAMS must maintain the confidentiality of the proceedings. Unlike the JAMS International Arbitration Rules, revised June 1, 2021 (see International Institutional Rules, below), the JAMS Comprehensive Arbitration Rules applicable to domestic arbitrations do not address whether the parties themselves must treat the proceedings as confidential.
• Under Article 40 of the International Centre for Dispute Resolution (ICDR) International Dispute Resolution Procedures (Including Mediation and Arbitration Rules), amended and effective March 1, 2021, the parties, arbitrators, witnesses, and ICDR must keep confidential all information about the arbitration and the award. However, unless a party objects in writing within six months of the award, the ICDR may publish selected awards, orders, decisions, and rulings that are edited to conceal party names and other identifying details (Article 40.4).
• The American Arbitration Association (AAA) Commercial Arbitration Rules and Mediation Procedures (Including Procedures for Large, Complex Commercial Disputes) , amended and effective October 1, 2013; Construction Industry Arbitration Rules and Mediation Procedures (Including Procedures for Large, Complex Commercial Disputes), amended and effective July 1, 2015; Accounting and Related Services Arbitration Rules and Mediation Procedures, amended and effective February 1, 2015; and Consumer Arbitration Rules, amended and effective September 1, 2014, do not require the parties to keep the arbitration proceedings confidential. However, under the AAA’s Code of Ethics for Arbitrators in Commercial Disputes (effective March 1, 2004) Canon VI, AAA Commercial Arbitration Rule 25, and Rule 23 of AAA Employment Arbitration Rules and Mediation Procedures (amended and effective November 1, 2009), the arbitrator must keep the proceedings confidential.

The Financial Industry Regulatory Authority (FINRA) Code of Arbitration Procedure for Customer Disputes and the FINRA Code of Arbitration Procedure for Industry Disputes do not address confidentiality in arbitration proceedings. FINRA publishes all FINRA arbitration awards in its publicly accessible Arbitration Awards Online Database.

International Institutional Rules

The JAMS International Arbitration Rules (amended and effective June 1, 2021) require the parties, arbitrators, administrator, and staff to maintain the confidentiality of the arbitration proceeding and resulting award (JAMS International Rule Article 16).

The rules of several international arbitral institutions do not address confidentiality, including:

• The International Chamber of Commerce (ICC) Arbitration Rules (2012, 2017, and 2021).
• The United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules (2010, 2013, and 2021).

If parties want to keep an arbitration with these institutions confidential, they should include a confidentiality requirement in their arbitration agreement (see Confidentiality Required by an Arbitration Agreement, below) or enter into a confidentiality agreement before the arbitration begins.

Confidentiality Under Arbitration Statutes

The Federal Arbitration Act (FAA) does not impose any confidentiality requirements.

Some state arbitration statutes provide for confidentiality in arbitral proceedings. For example:

• In Delaware, arbitrations under the Delaware Rapid Arbitration Act (DRAA) are confidential (Del. Rapid Arbitration Rule 5; Delaware Superior Court Rules of Civil Procedure, Rule 139(b)).
• In California, all arbitration documents in attorney fee arbitrations before the State Bar of California are confidential (State Bar of California Rule 3.512), including:
  • the request for arbitration;
  • the reply;
  • the state bar file;
  • any arbitration exhibits;
  • the award; and
  • any other record of an arbitration proceeding.
• Texas mandates that any record made at an alternative dispute resolution proceeding is confidential, and a court cannot compel the parties or arbitrators to disclose information about it (Tex. Civ. Prac. & Rem. Code Ann. § 154.073).

Many states modeled their arbitration statutes on the Revised Uniform Arbitration Act (RUAA) (last revised in 2000), which does not address confidentiality. Because there is no presumption of arbitration confidentiality in states that have adopted the RUAA, parties in those states that want to keep their arbitration proceedings confidential must either:

• Enter into a confidentiality agreement (see Confidentiality Required by an Arbitration Agreement, below).
• Agree to arbitration under institutional rules that provide for confidentiality (see Confidentiality Under Institutional Arbitration Rules, above).

Before advising clients on confidentiality issues in arbitration, counsel should check the governing state’s arbitration laws to see whether they address confidentiality.

Confidentiality Required by an Arbitration Agreement

The parties also may keep their arbitration proceedings confidential by agreement. Arbitration is a creature of contract, and parties may structure their dispute resolution procedures as they wish (see Mastrobuono v. Shearson Lehman Hutton, 514 U.S. 52, 57 (1995); AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 649 (1986)). Parties that want to ensure that their arbitration proceedings and documents remain confidential should therefore include a confidentiality provision in their arbitration agreement or sign a separate agreement requiring them to keep the arbitration materials confidential. Courts generally uphold agreements where parties contract to forgo using certain materials unless a legal duty, such as a subpoena or other court order, compels disclosure (see, for example, Petrobas America, Inc. v. Samsung Heavy Indus. Co., 2019 WL 3759840, at *3 (S.D. Tex. Aug. 9, 2019); Gotham Holdings, LP v. Health Grades, Inc., 580 F.3d 664, 665-66 (7th Cir. 2009)).

The National Labor Relations Board has held that mandatory arbitration agreements requiring employment-related disputes to be arbitrated on a confidential basis are valid and enforceable under the FAA and do not violate the National Labor Relations Act, although arbitration agreements cannot prohibit employees from discussing workplace matters of mutual concern even where those matters are also the subject of an arbitration proceeding.

A party cannot ensure that its opponent complies with its obligations under a confidentiality agreement. Arbitrating parties that want to reduce the risk of a confidentiality breach can include confidentiality obligations in the arbitration agreement so that the arbitrator hears any disputes over a breach of that obligation. Having the arbitrator hear disputes over confidentiality may reduce the risk that a party blatantly violates the term of the arbitration agreement in front of the arbitrator. However, once the arbitration concludes, a party must seek the court’s intervention to redress a breach of the confidentiality obligation unless the parties agree that the arbitrator retains jurisdiction to hear future disputes over the confidentiality requirement.

Challenging Confidentiality Requirements

Just as some parties prefer to keep arbitration proceedings confidential (see Reasons That Parties Want Confidentiality, above), other parties may seek to avoid confidentiality requirements (and the arbitration agreement as a whole) because they give an unfair advantage to the adversary.

Parties challenging a confidentiality requirement in arbitration agreements often claim that the confidentiality requirement renders the entire arbitration agreement substantively unconscionable. They argue that the confidentiality requirement unfairly benefits repeat players who routinely face the same kinds of claims (for example, employers who may use their knowledge from prior arbitrations to assist in defending against the claims) while restraining nonrepeat players from investigating similar claims or contacting similarly situated parties (see CarMax, 94 F. Supp. 3d at 1121; Ali v. J.P. Morgan Chase, N.A., 647 Fed. App’x 783, 786 n.2 (9th Cir. 2016); Mikhak v. Univ. of Phoenix, 2016 WL 3401763, at *12-13 (N.D. Cal. June 21, 2016)). Courts typically do not consider this claim and generally hold that:

• The enforceability of the confidentiality requirement is a matter for the arbitrator to decide (see Carmax, 94 F. Supp. 3d at 1121; Kilgore v. KeyBank Nat’l Ass’n, 718 F.3d 1052, 1059 n.9 (9th Cir. 2013)).
• Even if the confidentiality requirement is unconscionable, its invalidity generally does not render the entire arbitration agreement unenforceable (see Carmax, 94 F. Supp. 3d at 1121; Melez v. Kaiser Found. Hosps., Inc., 2015 WL 898455, at *11 (C.D. Cal. Mar. 2, 2015) (the fact that a confidentiality clause was overly restrictive and not enforceable did not compel the conclusion that the arbitration agreement itself was unenforceable)).

However, courts have found confidentiality provisions overbroad and substantively unconscionable if they prohibit a party from mentioning to anyone the existence of a controversy or the arbitration proceeding (see Davis v. O’Melveny & Myers, 485 F.3d 1066, 1078 (9th Cir. 2007) (invalidating the entire arbitration agreement because the unconscionable provisions were not severable), overruled on other grounds by Kilgore v. KeyBank, Nat’l Ass’n, 673 F.3d 947 (9th Cir. 2013); Ting v. AT&T, 319 F.3d 1126, 1151 (9th Cir. 2003)).

Confidentiality of the Award

Parties sometimes agree to keep the arbitration award confidential and require a party to file under seal any award or other court filings containing arbitration materials. However, despite the parties’ agreement, they may have difficulty convincing a court to keep the award confidential because:

• Courts often are reluctant to file or maintain documents under seal.
• Documents filed in court are presumptively accessible by the public.

Confidentiality When Confirming or Vacating an Award

When the parties receive an arbitration award:

• The losing party may comply with the award voluntarily.
• If the losing party does not comply with the award voluntarily:
  • the winning party may start a court proceeding asking a court to confirm the award so that the losing party must comply with it (see D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 104 (2d Cir. 2006)); or
  • the losing party may challenge the award by starting a court proceeding asking a court to vacate the award.

The parties may lose their right to maintain an arbitration award’s confidentiality if any party seeks court intervention by starting a public court proceeding to move or petition the court to vacate or confirm an arbitration award. The moving party must present the award to the court in a public filing.

Parties may attempt to maintain the confidentiality of the award in court by requesting permission to file the award and the arbitral record under seal. However, there is a strong presumption in favor of public access to dispositive motions, including motions to confirm or vacate an arbitration award (see Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1178-80 (9th Cir. 2006); Bristol-Myers Squibb Co. v. Novartis Pharma AG, 2022 WL 2133826, at *3 (S.D.N.Y. June 14, 2022), reconsideration denied, 2022 WL 2274354 (S.D.N.Y. June 23, 2022)). In most courts, to keep the documents filed with a motion to confirm or vacate an arbitration award confidential, a party must show that the documents deserve long-term confidential treatment, such as because they contain trade secrets. (Baxter Int’l v. Abbott Labs, 297 F.3d 544, 547-48 (7th Cir. 2002); see Eagle Star Ins. v. Arrowood Indem. Co., 2013 WL 5322573, at *2-3 (S.D.N.Y. Sept. 23, 2013).)

If the party seeking to file under seal fails to show that the documents need confidential treatment, the court will refuse sealing (see PDV Sweeny, Inc. v. ConocoPhillips Co., 2014 WL 4979316, at *3 (S.D.N.Y. Oct. 6, 2014), aff’d 670 F. App’x 23 (2d Cir. 2016)). For example, at least one court refused to seal an arbitration award that contained a mandatory injunction because, under FRCP 65(d)(1)(B), courts must put the public on notice of the injunction’s terms (see Glob. Reinsurance Corp.-U.S. Branch v. Argonaut Ins. Co., 2008 WL 1805459, at *2 (S.D.N.Y. Apr. 21, 2008)).

Courts use their discretion when considering whether to seal any papers related to a motion to confirm or vacate an arbitration award. For example, some courts:

• Refuse to seal all of the documents that a party submits on a motion to confirm or vacate an arbitration award but permit selective sealing or redacting to maintain the confidentiality of discrete, highly confidential portions of the award (see Ovonic Battery Co., Inc v. Sanyo Elec. Co., 2014 WL 3749152, at *3 (N.D. Cal. Jul. 24, 2014); Scott D. Boras Inc. v. Sheffield, 2009 WL 3444937, at *1 (S.D.N.Y. Oct. 26, 2009)).
• Permit the parties to file the award and other papers relating to the arbitration under seal when all parties agree to the sealing (see Barkley v. Pizza Hut of Am., Inc., 2015 WL 5915817, at *2 (M.D. Fla. Oct. 8, 2015)).
• Do not permit parties to file or maintain the filing under seal even if:
  • the arbitration award expressly states that it is and will remain confidential (see Zimmer v. Scott, 2010 WL 3004237, at *2-3 (N.D. Ill. Jul. 28, 2010)); or
  • both parties agree to keep the award confidential and jointly ask the court to keep the award filed under seal (see DXC Tech., 2019 WL 4621938, at *1-2; Eagle Star, 2013 WL 5322573, at *3).

Parties considering filing documents under seal should consult the court’s local rules regarding any additional showing the court requires.

Parties may have an easier time maintaining the confidentiality of an arbitration award where applicable rules do not require judicial review to enforce the award. For example, in Delaware, arbitrating under the DRAA may keep the award confidential because DRAA arbitration does not require judicial review of the award. The DRAA instead allows parties to agree that one or more private appellate arbitrators review the final award rather than the court. (10 Del. C. § 5809(d)(2).)

Confidentiality and Nonparty Subpoenas

Parties to an arbitration agreement should be aware that their agreement to keep an arbitration award confidential may not prevent a nonparty from seeking to subpoena the award under the FRCP (see Gotham Holdings, L.P. v. Health Grades, Inc., 580 F.3d 664, 665-66 (7th Cir. 2009); but see Fireman’s Fund Ins. v. Cunningham Lindsey Claims Mgmt., Inc., 2005 WL 1522783, at *3-4 (E.D.N.Y. Jun. 28, 2005) (rejecting a nonparty’s request for a copy of a confidential award based on a strong public interest in honoring the arbitrating parties’ expectation of confidentiality and the absence of extraordinary circumstances and the nonparty’s compelling need for the award)).