Proactive and Reactive Transparency in Arbitration Involving the State

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1 Pan-American Arbitration Congress, São Paulo October 23, 2017 Panel 2: The Practice of Arbitration With Public Entities: Experience and Challenges Proactive and Reactive Transparency in Arbitration Involving the State Mark A. Luz Senior Counsel, Trade Law Bureau Avocat Principal, Direction générale du droit commercial international Advogado Sênior, Escritório de direito do comércio internacional Global Affairs Canada and Embassy of Canada to Brazil This presentation is done in my personal capacity. Views expressed are my own and do not necessarily reflect the views of the Government of Canada 1

2 Proactive and Reactive Transparency in Arbitration Involving the State 1. Confidentiality of Arbitration Involving Governments 2. Proactive Transparency in Investor-State Arbitration 3. Reactive Disclosure in Commercial Arbitrations Involving Government 4. Thoughts from Canada, Considerations for Brazil 2

3 Confidentiality of Arbitration Involving Governments While confidentiality is seen as one of the key benefits of arbitration, should it apply without qualification when a party to the arbitration is a government? Need to balance public interest and accountability of government with rights of the parties to protect confidentiality of sensitive commercial and financial information and the efficiency of the arbitral process. Concerns regarding the legitimacy of investor-state arbitration prompted a proactive approach to transparency. Commercial arbitration involving governments is generally reactive, i.e., disclosure only when access to documentation is specifically sought by a third party, but subject to restrictions. Proactive versus reactive arbitration transparency which is better when a government is involved in the arbitration, or is there a middle ground? 3

4 Proactive Transparency in Investor-State Arbitration Notes of Interpretation of Certain Chapter 11 Provisions (NAFTA Free Trade Commission, July 31, 2001) Having reviewed the operation of proceedings conducted under Chapter Eleven of the North American Free Trade Agreement, the Free Trade Commission hereby adopts the following interpretations of Chapter Eleven in order to clarify and reaffirm the meaning of certain of its provisions: 1. Access to documents a. Nothing in the NAFTA imposes a general duty of confidentiality on the disputing parties to a Chapter Eleven arbitration, and, subject to the application of Article 1137(4), nothing in the NAFTA precludes the Parties from providing public access to documents submitted to, or issued by, a Chapter Eleven tribunal. b. In the application of the foregoing: i. In accordance with Article 1120(2), the NAFTA Parties agree that nothing in the relevant arbitral rules imposes a general duty of confidentiality or precludes the Parties from providing public access to documents submitted to, or issued by, Chapter Eleven tribunals, apart from the limited specific exceptions set forth expressly in those rules. ii. Each Party agrees to make available to the public in a timely manner all documents submitted to, or issued by, a Chapter Eleven tribunal, subject to redaction of: a. confidential business information; b. information which is privileged or otherwise protected from disclosure under the Party's domestic law; and c. information which the Party must withhold pursuant to the relevant arbitral rules, as applied. [ ] 4

5 Proactive Transparency in Investor-State Arbitration UNCITRAL Rules on Transparency in Treaty-Based Investor-State Arbitration (2014) Article 2 Publication of Information at the commencement of arbitral proceedings Upon receipt of the notice of arbitration, the repository shall promptly make available to the public information regarding the name of the disputing parties, the economic sector involved and the treaty under which the claim is being made. Article 3 Publication of Documents Subject to redaction for confidential or protected information, documents which shall be made available to the public include the NOA and response, written pleadings, a table listing all exhibits to submissions, expert reports and witness statements, hearing transcripts, orders, decisions and awards of the tribunal. Expert reports and witness statements shall be made available upon request, subject to redaction. The tribunal, in consultation with the disputing parties, shall decide how to make exhibits available to the public, subject to redaction for confidential information. Hearings are public but subject to appropriate arrangements to protect confidential information and the integrity of the proceedings 5

6 Reactive Disclosure in Commercial Arbitrations Involving Government In Canada, the federal Government may enter into commercial arbitration agreements subject to the Commercial Arbitration Act (based on the UNCITRAL Model Law); When the federal government is a party to an arbitration, the Access to Information Act and Privacy Act apply as laws of general application and public order; There are no confidentiality provisions in the Commercial Arbitration Act and case law in Canada is not decisive as to whether there is an implied obligation of confidentiality in arbitration; Canadian citizens and permanent residents can make a request under the Access to Information Act to access record(s) under the control of a government institution, which can include documents from an arbitration involving the federal government. The other party shall be consulted before documents are released, and decisions to disclose are reviewable by the Federal Court of Canada. 6

7 Reactive Disclosure in Commercial Arbitrations Involving Government Access to Information Act (R.S.C. 1985, c. A-10) Economic interests of Canada 18 The head of a government institution may refuse to disclose any record requested under this Act that contains (a) trade secrets or financial, commercial, scientific or technical information that belongs to the Government of Canada or a government institution and has substantial value or is reasonably likely to have substantial value; (b) information the disclosure of which could reasonably be expected to prejudice the competitive position of a government institution or to interfere with contractual or other negotiations of a government institution; (c) scientific or technical information obtained through research by an officer or employee of a government institution, the disclosure of which could reasonably be expected to deprive the officer or employee of priority of publication; or (d) information the disclosure of which could reasonably be expected to be materially injurious to the financial interests of a government institution or to the ability of the Government of Canada to manage the economy of Canada or could reasonably be expected to result in an undue benefit to any person [ ] 7

8 Reactive Disclosure in Commercial Arbitrations Involving Government Access to Information Act (R.S.C. 1985, c. A-10) Third party information 20 (1) Subject to this section, the head of a government institution shall refuse to disclose any record requested under this Act that contains (a) trade secrets of a third party; (b) financial, commercial, scientific or technical information that is confidential information supplied to a government institution by a third party and is treated consistently in a confidential manner by the third party; (b.1) [ ] (c) information the disclosure of which could reasonably be expected to result in material financial loss or gain to, or could reasonably be expected to prejudice the competitive position of, a third party; or (d) information the disclosure of which could reasonably be expected to interfere with contractual or other negotiations of a third party. 8

9 Proactive versus Reactive Transparency - Considerations for Brazil Arbitrations in Brazil involving government entities ( administração pública direta ) must observe o princípio da publicidade (Art. 2º, 3º, da Lei nº 9.307/96, com a redação dada pela Lei nº /15, no art. 2º, 3º); CAM-CCBC Administrative Resolution N. 15/2016 establishes that CAM-CCBC may publicize on its website and otherwise inform third parties as to the existence of the arbitration, date of the arbitration request and the names of the parties but does not provide other documents or information regarding the proceedings (Art. 3). The disputing parties are responsible for determining what documents may be disclosed and in what format to the public (Art. 1) while respecting confidential information protected by law, trade secrets, third-party documents, etc. (Art. 1 parágrafo único): The Arbitral Tribunal decides disputes regarding confidentiality of documents (Art. 2). Hearings are in camera (Art. 3(2)) 9