Nearly every US reinsurance arbitration includes a Confidentiality Agreement. The vast majority of those confidentiality agreements are based on the ARIAS•U.S. Confidentiality Agreement and Protective Order model form. Most confidentiality agreements provide that disclosure may be made “as is necessary in connection with court proceedings relating to any aspect of the arbitration, including but not limited to motions to confirm, modify, vacate or enforce an award issued in this arbitration.” Most also provide that “[i]n connection with any disclosures pursuant to [court proceedings], the parties agree, subject to court approval, that all submissions of Arbitration Information to a court shall be sealed and/or redacted so as to limit disclosure of Arbitration Information.” So how well do these provisions hold up in court when a motion to seal is made?
In TIG Insurance Co. v. National Union Fire Insurance Co. of Pittsburgh, P.A., No. 19 Civ. 10238 (PAE), 2019 U.S. Dist. LEXIS 205120 (S.D.N.Y. Nov. 25, 2019), the court addressed an unopposed petition to confirm an arbitration award and an unopposed motion to seal the arbitration award and redact sections of the petition. The court, in some detail, went through the confirmation analysis (and granted confirmation) and the request to seal. Following a long line of cases in the New York federal courts (the court cited 7 cases), the court denied the motion to seal and ordered the parties to file unredacted copies of the award and petition.
So what did the court think of the confidentiality agreement that the parties relied upon as the basis for the motion to seal? Not much. First, said the court, the confidentiality agreement is not binding on the court. Moreover, said the court, the confidentiality agreement does not by its terms require that the matter proceed under seal. The court quoted most of the language from the model agreement above, noting that “information may be” disclosed in court proceedings and that sealing was subject to the court’s approval. Thus, said the court, “as the plain text of the agreement acknowledges, it is up to the Court independently to determine whether the parties’ desire to seal the arbitration information in this petition overcomes the weighty presumption that the ‘public should have access to the proceedings and documents of courts.’” (citations omitted). In detail, the court went through the three-step test to see if the presumption of public access was overcome and found that it was not even close.
The court concluded that “by availing themselves of the judicial process, the parties must also contend with the values of transparency and public access which undergird its legitimacy.” (citations omitted).
This all begs the question of whether it makes sense to petition the court to confirm an arbitration award when the award has been satisfied already, if one of the goals of arbitration is to maintain confidentiality. Not every jurisdiction rules this way, but this is clearly a significant trend in many jurisdictions.